Doing Business in the European Union 2017: Bulgaria, Hungary and Romania Comparing Business Regulation Domestic Firms in 22 Cities in for  Bulgaria, Hungary and Romania with 187 Other Economies © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Doing Business in the European Union 2017: Bulgaria, Hungary and Romania Comparing Business Regulation for  Domestic Firms in 22 Cities in Bulgaria, Hungary and Romania with 187 Other Economies Resources on the Doing Business website Doing Business in the European Subnational and regional projects Union 2017: Bulgaria, Hungary Differences in business regulations at the and Romania subnational and regional level http://www.doingbusiness.org/EU1 http://www.doingbusiness.org /Subnational Current features News on the Doing Business project Historical data http://www.doingbusiness.org Customized data sets since DB2004 http://www.doingbusiness.org Rankings /custom-query How economies rank—from 1 to 190 http://www.doingbusiness.org/rankings Law library Online collection of business laws and Data regulations relating to business All the data for 190 economies—topic http://www.doingbusiness.org rankings, indicator values, lists of /Law-library regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on new business density (number of newly registered companies per 1,000 Reports working-age people) for 136 economies Access to Doing Business reports as well http://www.doingbusiness.org/data as subnational and regional reports, case /exploretopics/entrepreneurship studies and customized economy and regional profiles Distance to frontier http://www.doingbusiness.org/Reports Data benchmarking 190 economies to the frontier in regulatory practice and a Methodology distance to frontier calculator The methodologies and research papers http://www.doingbusiness.org underlying Doing Business /data/distance-to-frontier http://www.doingbusiness.org /Methodology Information on good practices Showing where the many good Research practices identified by Doing Business Abstracts of papers on Doing Business have been adopted topics and related policy issues http://www.doingbusiness.org/data http://www.doingbusiness.org/Research /good-practice Doing Business reforms Short summaries of DB2017 business regulation reforms and lists of reforms since DB2006 http://www.doingbusiness.org/Reforms iii Doing Business in the European Union 2017: AT A G LANC Bulgaria, Hungary and Romania E The latest subnational report of the Doing Business series in the European Union Full report: www.doingbusiness.org/EU1 D oing Business in the European Union 2017: Bulgaria, Hungary and Romania focuses on business This report contains data current as of December 2016 and includes comparisons with 187 other Doing Business measures aspects of regulation that enable or hinder entrepreneurs in starting, operating regulations and their enforcement economies based on data from or expanding a business—and in five Doing Business areas. It goes Doing Business 2017: Equal provides recommendations and good beyond Sofia, Budapest and Bucharest Opportunity for All. practices for improving the business to benchmark 19 additional cities. environment. Five Doing Business indicator sets covering areas of local jurisdiction or practice Starting a business Getting electricity Records the procedures, time, cost and paid-in Records the procedures, time and cost required minimum capital required for a small or medium- for a business to obtain a permanent commercial size domestic limited liability company to electricity connection for a standardized formally operate; includes a gender dimension to warehouse; assesses the reliability of the account for any gender discriminatory practices. electricity supply and the transparency of tariffs. Dealing with construction permits Registering property Records the procedures, time and cost required Records the procedures, time and cost required for a small or medium-size domestic business to transfer a property title from one domestic to obtain the approvals needed to build a firm to another so that the buyer can use commercial warehouse and connect it to water the property to expand its business, use it and sewerage; assesses the quality control and as collateral or, if necessary, sell it; assesses safety mechanisms in the construction permitting the quality of the land administration system; system. includes a gender dimension to account for any gender discriminatory practices. Enforcing contracts Records the time and cost for resolving a commercial dispute through a local first-instance court, which hears arguments on the merits of the case and appoints an expert to provide an opinion on the quality of the goods in dispute; assesses the existence of good practices in the court system. BULGARIA: Burgas, HUNGARY: Budapest, Debrecen, ROMANIA: Brasov, Bucharest, 22 Pleven, Plovdiv, Ruse, Gyor, Miskolc, Pecs, Szeged, Cluj-Napoca, Constanta, Craiova, cities Sofia, Varna Szekesfehervar Iasi, Oradea, Ploiesti, Timisoara Advantages and limitations of the Doing Business methodology Doing Business does not cover: Focus on the law and practice Reliance on expert respondents ✗ Security Makes the indicators “actionable” because Reflects knowledge of those with most ✗ Market size the law is what policy makers can change. experience. ✗ Macroeconomic stability ✗ State of the financial system Use of standardized case scenarios Focus on domestic and formal sector ✗ Prevalence of bribery and Enables comparability across locations, Keeps attention on the formal sector, where corruption but reduces the scope of the data. firms are most productive, but does not ✗ Level of training and skills of the reflect the informal sector or foreign firms. labor force A collaboration of the Council of Ministers of Bulgaria, the Ministry of National Economy of Hungary, and the Ministry of Regional Development and Public Administration and Ministry of Economy, Commerce and Business Environment Relations of Romania with the World Bank Group Global Indicators Group and World Bank country offices. Funded by the European Commission, Directorate-General Regional and Urban Policy. iv Contents Foreword vii Overview 1 What does Doing Business in the European Union 2017: Bulgaria, Hungary and Romania measure? 3 What are the main findings? 4 The way forward 6 Summary of Indicator Findings: Subnational Variation in Regulatory Performance 13 Where is starting a business easier? 14 Where is dealing with construction permits easier—and the quality of building regulation higher? 15 Where is getting electricity easier—and the power supply more reliable? 16 Where is registering property easier—and land administration stronger? 18 Where is enforcing contracts easier—and the quality of judicial processes higher? 19 Starting a Business 22 How does starting a business work in Bulgaria, Hungary and Romania? 24 What can be improved? 30 Dealing with Construction Permits 34 How does dealing with construction permits work in Bulgaria, Hungary and Romania? 35 What can be improved? 42 Getting Electricity 47 How does getting electricity work in Bulgaria, Hungary and Romania? 48 What can be improved? 56 Registering Property 59 How does registering property work in Bulgaria, Hungary and Romania? 62 What can be improved? 67 Enforcing Contracts 71 How does contract enforcement work in Bulgaria, Hungary and Romania? 72 What can be improved? 79 About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania 84 Data Notes 97 City Snapshots 119 Indicator Snapshots 130 Indicator Details 135 Starting a business 135 Dealing with construction permits 138 Getting electricity 161 Registering property 170 Enforcing contracts 176 Acknowledgments 180 v Boxes 3.1 Three markedly different approaches to going digital in company registration in Bulgaria, Hungary and Romania 26 3.2 Is VAT registration set to become easier in Bulgaria and Romania? 28 4.1 High standards for transparency and construction supervision in Austria 42 6.1 A long history of improvements in Hungary’s land administration system 61 6.2 Going electronic in property registration—an EU example of good practice from Denmark 69 7.1 A holistic approach to case management in the Norwegian courts 79 vi vii Foreword Ten years ago the European Union (EU) The aim is simple: to provide policy We hope that this study will benefit our expanded to include two new members makers with a factual baseline for their partner countries as a tool to promote —Bulgaria and Romania; Hungary, along strategies to promote a better regulatory competition between the cities and with nine other countries, had joined three framework for development and growth. regions, to encourage peer learning, and years earlier. Membership benefited all Removing needless bureaucratic regula- to inspire policy makers to improve the new entrants, who experienced significant tions and superfluous red tape reduces ease of doing business in their jurisdic- growth, rising incomes and convergence the cost for local firms to do business tions. Small administrative improvements in living standards with the rest of the EU. and enhances their efficiency and com- can make a big difference in the life of petitiveness abroad. Local authorities can small firms—unlike larger businesses that Despite the successes from EU acces- now see how they compare with the rest face the same bureaucratic inefficiencies, sion, member states continue to face of the country and with the rest of the they do not have access to the resources economic challenges, given a volatile world, learn what their better-performing and skills needed to get better and faster international economic environment peers are doing, and take steps to improve service. and the continuous need for institutional their competitiveness. improvements. The World Bank has been There are other EU countries that have a partner of the new EU member states The study’s results are revealing: the gap benefited from similar subnational in several areas, combining our deep between the benchmarked cities is sig- regulatory analysis—such as Italy, Poland institutional knowledge of the EU with nificant, even within the same country— and Spain. They can offer examples of expertise from our global experience. with the biggest regulatory differences how peer-to-peer learning and inter- One such area is strengthening the busi- found within Bulgaria and Romania. Yet agency coordination help drive regulatory ness environment, which we consider each country also has cities that are improvements. And we at the World Bank key to improving competitiveness and to world class in at least one area. hope to continue to provide this service creating better conditions for sustainable for other EU member states. and equitable growth. Reform-minded officials can make tan- gible improvements by replicating mea- We are pleased to have partnered with sures already successfully implemented the European Commission and the in other cities within their country. Take governments of Bulgaria, Hungary and Bulgaria, for example. If represented Romania to conduct this study—focusing by Varna rather than Sofia in the Doing on the regulatory system, the nature of Business global ranking on the ease of business governance and the efficacy of starting a business, Bulgaria would jump the bureaucracy across different loca- 25 places, from 82 to 57. A Romanian city tions in each country. The study’s robust adopting the court efficiency of Timisoara Arup Banerji data on business regulation in 22 cities and the costs of Iasi would rank among Regional Director give a nuanced and comprehensive repre- the top 10 economies globally on the European Union sentation of the business and regulatory ease of enforcing contracts. Pecs is not World Bank Group environment at the local administrative only the Hungarian champion in dealing unit level. Thus it is a deeper view of the with construction permits; along with regulatory system than would have been Szeged, it also outperforms the EU aver- possible using the global Doing Business age in this area—the only two of the 22 report alone. benchmarked cities to do so. viii Overview MAIN FINDINGS ƒƒ Business regulations and their implementation vary substantially both among and within Bulgaria, Hungary and Romania—with the biggest differences in Bulgaria and Romania. ƒƒ No city excels in all five areas measured; among the 22 cities benchmarked, each ranks in the top half on at least one indicator set and in the bottom half on at least one other. ƒƒ Each country has cities that outperform the European Union average in at least one area: Varna and Pleven in Bulgaria in starting a business, Pecs and Szeged in Hungary in dealing with construction permits, all Hungarian cities and Oradea in Romania in registering property, and most cities in enforcing contracts. But no city is close to the EU average in getting electricity. ƒƒ Budapest and Sofia both lag behind most of the smaller cities in their countries. Yet Bucharest ranks in the top half among Romanian cities in most areas measured, demonstrating the potential for dealing efficiently with high demand for business services. ƒƒ Reform-minded officials can make tangible improvements by replicating good practices in other cities in their country. Bulgarian cities could make starting a business easier by adopting the good practices in Varna. Hungarian cities could improve in getting electricity by emulating the good practices of Szeged and Szekesfehervar. And Romanian cities could look to Timisoara’s example to improve contract enforcement. 2 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA B y any metric Bulgaria, Hungary climate, improving the employability of active reformers globally according to and Romania have made extraor- all citizens and increasing the efficiency the Doing Business survey—Romania in dinary progress in the past and effectiveness of public institutions. 2006 and Bulgaria in 2007. In the wake quarter century. After transitioning In Bulgaria and Romania higher-quality of the financial crisis, as the doing busi- from communism, the three countries infrastructure will also be needed, to ness agenda gained prominence again carried out a set of important reforms reap the full benefits of open trade throughout the EU, all three countries to join the European Union and were within the EU. While all potential made considerable efforts to remove rewarded with strong and inclusive growth drivers should be kept in mind, a the remaining obstacles to growth and growth, declining poverty, rising living favorable business climate is a priority job creation. Hungary counted among standards and rapid convergence toward for private-sector-led growth and job the top 10 most active reformers in EU income levels. Bulgaria and Romania creation. Creating a level playing field 2010. Overall, Romania has made grew by an average 6% a year from for all economic actors is critical—to the biggest leap of any EU member 2000 up to the global financial crisis of ensure that entrepreneurs with good state except Poland in closing the gap 2008—a rate that moved their income ideas and energy can start and grow with global best practices in business per capita from a third of the EU average businesses, generating employment. regulation (figure 1.1). But the reform to a half.1 Hungary is already classified This is particularly important for small momentum has been slowing in recent as a high-income economy. In all three and medium-size firms, which make up years. This is especially so in Bulgaria, countries open borders, rising incomes more than 98% of all businesses in the where Doing Business has recorded no and integration in the EU market have EU and provide around two-thirds of more than one regulatory reform annu- allowed citizens to participate in global the private sector jobs.4 ally since 2012. economic, social and technological progress to an unprecedented degree. Adhering to the common market treaty All three countries are now among has brought a surge of institutional the top 50 in the Doing Business global Today there are further reasons for opti- changes and improvements in the busi- ranking of 190 economies on the ease mism. All three economies are growing ness environment in all three countries. of doing business. But within the EU much faster than the EU average—with In the years leading up to EU acces- they rank among the 10 most restrictive Bulgaria exceeding 3% growth, and sion, two were among the top 10 most member states, below such competitors Romania 4% growth, in 2016.2 All three have falling, single-digit unemployment rates.3 Their public finances are mostly FIGURE 1.1  Romania has made more progress than any other EU member state sound and in good standing. But this does except Poland in closing the gap with global best practices in business regulation not mean that all is well. While before the Improvement in distance to frontier score global economic crisis the rate of income 25 growth for the bottom 40% outpaced the average, this trend has been reversed. 20 Long-term demographic trends are not favorable and are being exacerbated by 15 the outflows of well-qualified workers in 2004–13 2014–16 search of better opportunities abroad. 10 And convergence with Western neigh- bors has been slower than expected. A 5 reduced supply of outside investment and growing uncertainty in the global 0 economy compound these challenges. and Rep ia Lith lic ia atia nce y ch R atvia Slo lic Bul ia Hun ia y ece Cyp l Bel s Den m Esto k nia in Swe d den Net nland Kin ds m Lux Malta rg Ger ria ny a ru Ital gar r an n uan ven gar tug Spa giu gdo ma bou ub b n ma t Slo Roma Gre Aus Fra epu Uni herla Pol Irel Cro L Por Fi em If the three countries want to continue vak ted Cze their ascent and meet the rising expec- tations of their citizens, new growth drivers and a sustained commitment to Source: Doing Business database. reform will be needed. Achieving higher Note: The distance to frontier score shows how far an economy is from the best performance achieved by any economy on each Doing Business indicator. Higher scores indicate greater regulatory efficiency and quality. The vertical bars productivity growth—a key determinant in the figure show only the amount of improvement, not the entire distance to frontier score. Because of significant changes in the Doing Business methodology between 2013 and 2014, improvements are measured in two separate of long-term prosperity in any coun- periods, 2004–13 and 2014–16. The data set is incomplete for Cyprus, added to the Doing Business sample in 2009, try—will require enhancing the business and for Malta, added in 2014. OVERVIEW 3 as Poland, the Czech Republic and the Estonia, Finland or Ireland. Yet weak unevenness in performance across areas Baltic States (figure 1.2). Getting elec- performance in one area can coexist measured by Doing Business shows that tricity, dealing with construction permits with strong performance in another. regulatory reform remains incomplete, and paying taxes remain problematic in Hungary outperforms the EU average with more potential for yielding gains in all three countries. For example, compa- in several areas, including registering competitiveness. nies spend more than 450 working hours property and trading across borders (fig- a year compiling their taxes in Bulgaria ure 1.3). Romania ranks among the top and almost 300 hours in Hungary, economies in getting credit, and Bulgaria WHAT DOES DOING compared with less than 100 hours in in protecting minority investors. This BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, FIGURE 1.2  Romania, Bulgaria and Hungary all rank among the top 50 economies on HUNGARY AND ROMANIA the ease of doing business, though below the EU average MEASURE? Global ranking Denmark (3) 84.87 Doing Business tracks business regula- United Kingdom (7) 82.74 tions that affect small and medium-size Sweden (9) 82.13 domestic companies. In its annual pub- Estonia (12) 81.05 lication each economy is represented by Finland (13) 80.84 its largest business city. Doing Business reports at the subnational level yield a Latvia (14) 80.61 more nuanced picture, because many Germany (17) 79.87 regulations and administrative mea- Ireland (18) 79.53 sures are implemented or determined Austria (19) 78.92 by local authorities. Coordinating across Lithuania (21) 78.84 different levels of government and Poland (24) 77.81 institutions is essential to reduce the Portugal (25) 77.40 regulatory burden on companies. From Czech Republic (27) 76.71 an entrepreneur’s point of view, it is Netherlands (28) 76.38 irrelevant whether a requirement comes from the municipality, the region or a France (29) 76.27 national institution. EU average (30) 76.27 Slovenia (30) 76.14 This study is the latest in a series to Spain (32) 75.73 expand the benchmarking exercise to Slovak Republic (33) 75.61 secondary cities in one or more EU Romania (36) 74.26 member states so as to give a more Bulgaria (39) 73.51 complete representation of the busi- Hungary (41) 73.07 ness and regulatory environment.5 This Belgium (42) 73.00 edition covers 22 cities in Bulgaria, Croatia (43) 72.99 Hungary and Romania.6 The focus is on indicator sets that measure the Cyprus (45) 72.65 complexity and cost of regulatory pro- Italy (50) 72.25 cesses, as well as the strength of legal Luxembourg (59) 68.81 institutions, affecting five stages in the Greece (61) 68.67 life of a small to medium-size domestic Malta (76) 65.01 firm: starting a business, dealing with 0 20 40 60 80 100 construction permits, getting electric- Distance to frontier score (0–100) ity, registering property and enforcing contracts through a local court. Working Source: Doing Business database. to implement regulatory reforms at Note: The distance to frontier score shows how far an economy is from the best performance achieved by any economy on each Doing Business indicator. The measure is normalized to range from 0 to 100, with 100 representing the frontier both the national and subnational level of best practices (the higher the score, the better). Bulgaria, Hungary and Romania, as well as the other EU member could increase the pace of convergence states, are each represented by their capital city (which is also their largest business city). Data are based on the Doing Business 2017 report. toward best practices. 4 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 1.3  Bulgaria, Hungary and Romania have high global rankings in some areas measured by Doing Business, relatively low rankings in others Global ranking (1–190) New Zealand, Qatar, United 16 EU member New Zealand New Zealand New Zealand Korea, Rep. New Zealand New Zealand Singapore Arab Emirates states* Korea, Rep. Finland Easiest (1) 1 7 8 13 20 21 26 36 28 32 39 48 41 48 57 50 49 49 53 62 60 63 Bulgaria 69 75 77 Hungary 82 81 83 95 Romania 104 EU average 121 134 Most difficult (190) Ease of Starting a Dealing with Getting Registering Getting Protecting Paying Trading across Enforcing Resolving doing business business construction electricity property credit minority taxes borders contracts insolvency permits investors Source: Doing Business database. Note: Bulgaria, Hungary and Romania, as well as the other EU member states used to compute the EU average, are each represented by their capital city (which is also their largest business city). Data are based on the Doing Business 2017 report. * These are Austria, Belgium, Croatia, the Czech Republic, Denmark, France, Hungary, Italy, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovenia, the Slovak Republic and Spain. WHAT ARE THE MAIN can be attributed in part to the higher show more homogeneous performance, FINDINGS? demand for business services in the all ranking in the top half in four areas— largest business city than in the smaller, except for Budapest, which does so in The results reveal substantial varia- less populated ones. As an illustration, three areas—and in the bottom half in tion in business regulations and their Budapest sees more property sale starting a business. implementation among the three coun- transactions in a year than all six of the tries—and even among cities within other Hungarian cities combined.7 Yet Third, no city excels in all areas. Indeed, the same country (table 1.1). Compared Bucharest ranks in the top half among each city ranks in the top half among regionally, the Hungarian cities have a Romanian cities in all areas but enforc- the 22 cities on at least one indicator stronger performance in four of the five ing contracts—demonstrating that large set and in the bottom half on at least areas measured. But they lag behind cities can be efficient and offer quality one other (see table 1.1). For example, in starting a business—where four services by capitalizing on economies Varna (Bulgaria) has the top ranking in Bulgarian cities share the top posi- of scale and investing in administrative starting a business, but one of the low- tions—because of high costs (almost modernization. est in registering property. And while twice the EU average) and the highest Oradea (Romania) ranks near the top paid-in minimum capital requirement in Second, the biggest subnational differ- in starting a business, it could look to the EU. In areas where local authorities ences are in Bulgaria and Romania. In Timisoara (Romania) to improve its have the most autonomy in developing Bulgaria, Varna ranks 20 places higher performance in enforcing contracts. In and implementing regulatory rules, (at number 1) than Sofia in starting a Hungary, Budapest could look to Pecs such as dealing with construction business—while Ruse ranks 13 places or Szeged to learn how to improve permits and getting electricity, the higher than Sofia in enforcing contracts. efficiency in construction permitting. Romanian cities rank lowest. In Romania, Bucharest ranks 17 places In Romania, Timisoara and Constanta higher than Craiova (with the lowest could provide a positive example in the A granular look at the rankings leads to ranking) in starting a business—and area of contract enforcement. This kind several observations. First, Budapest and Timisoara 17 places higher than Brasov of subnational variation in regulatory Sofia both lag behind most of the smaller (also with the lowest ranking) in enforc- performance can help policy makers cities in their countries. These results ing contracts. The cities in Hungary identify areas where improvements OVERVIEW 5 TABLE 1.1  How close are the 22 cities to the best regulatory practices in the world? Starting a Dealing with Getting Registering Enforcing business construction permits electricity property contracts City (Country) DTF score Rank DTF score Rank DTF score Rank DTF score Rank DTF score Rank Burgas (Bulgaria) 90.05 3 69.23 11 65.49 3 70.67 18 72.68 15 Pleven (Bulgaria) 90.50 2 71.92 8 54.66 13 70.44 19 73.63 12 Plovdiv (Bulgaria) 90.05 3 68.30 12 65.06 5 69.59 21 72.36 17 Ruse (Bulgaria) 88.33 11 71.34 9 54.71 12 71.53 17 75.38 7 Sofia (Bulgaria) 86.82 21 72.75 6 54.64 14 69.23 22 67.04 20 Varna (Bulgaria) 90.56 1 70.53 10 59.05 10 70.19 20 74.23 9 Budapest (Hungary) 87.28 20 67.89 13 63.25 7 80.08 6 73.75 11 Debrecen (Hungary) 87.61 13 72.71 7 63.36 6 81.16 1 81.72 1 Gyor (Hungary) 87.32 18 73.35 5 63.25 7 80.80 4 74.20 10 Miskolc (Hungary) 87.61 13 73.47 4 61.76 9 80.92 2 79.53 2 Pecs (Hungary) 87.61 13 75.58 1 65.21 4 79.96 7 77.07 4 Szeged (Hungary) 87.57 16 74.38 2 67.46 1 80.80 4 75.98 6 Szekesfehervar (Hungary) 87.32 18 73.70 3 65.53 2 80.92 2 79.12 3 Brasov (Romania) 88.78 9 56.28 17 49.56 19 74.65 9 64.24 22 Bucharest (Romania) 89.53 5 58.09 15 53.23 15 74.65 9 72.25 18 Cluj-Napoca (Romania) 88.78 9 54.32 20 50.41 18 73.81 16 73.34 14 Constanta (Romania) 87.52 17 49.26 21 49.06 20 74.65 9 75.04 8 Craiova (Romania) 86.27 22 61.31 14 53.01 16 74.65 9 73.37 13 Iasi (Romania) 88.28 12 56.01 18 57.76 11 74.65 9 72.64 16 Oradea (Romania) 89.53 5 57.84 16 50.80 17 75.48 8 72.01 19 Ploiesti (Romania) 89.53 5 54.40 19 47.22 21 74.64 15 65.86 21 Timisoara (Romania) 89.53 5 48.92 22 43.56 22 74.65 9 76.13 5 Source: Doing Business database. Note: The distance to frontier (DTF) score shows how far a location is from the best performance achieved by any economy on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. are possible without major legislative among cities in each country suggest that result in longer waits for the urban plan- changes (figure 1.4). there are important lessons that cities ning approval than in any of the other can learn from one another and that will Hungarian cities. Budapest is also the Fourth, the distance to frontier score— make a difference in relative competitive- only one where the water and sewerage which shows how far each city is from ness not just within each country but also connections are completed by separate global best practices in absolute terms at the global level. agencies. as well as providing the basis for ranking the cities—reveals that the most marked For example, distance to frontier scores In getting electricity, big contrasts differences in performance within each for dealing with construction permits emerge among Bulgarian cities. Sofia’s country are in the areas of dealing with show big differences among Hungarian distance to frontier score (54.64) construction permits, getting electricity cities (figure 1.5). Pecs has a score is well below the global average. and enforcing contracts. This should not (75.58) that ranks it above Belgium and Meanwhile, Burgas’s score (65.49) be surprising, because many require- Norway and, along with Szeged’s score, is close to the global average. If Sofia ments in construction permitting are exceeds the EU average (74.14). By con- managed to replicate good practices under municipal competence, different trast, Budapest’s score (67.89) is almost found elsewhere in Bulgaria to shorten utility companies supply electricity in dif- 8 points lower than Pecs’s and well below delays and cut costs in the connection ferent regions of each country and the role the EU average, though higher than the process, not only would it move up in of local courts is paramount in enforcing global average (65.76). Heavy workloads the ranking of the 22 cities bench- contracts. These gaps in performance in the Budapest chief architect’s office marked in this report—but Bulgaria, as 6 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 1.4  Uneven performance across the different areas measured in each city reveals opportunities for reform and exchange of good practices ry) ) ga nia ia) ) ) un nia nia ) ) ma ary ary an ) ) ia) ) (H nia ) ) ry) nia ary (Bu ) ma nia a) ria ma Ro a i (R (Rom ng ng ) an ria ari ) ar ry) ) ga rga gari a ry) ria ma g lga ria ia) (Ro a( ma (Ro Hu u m om erv un lga ulg ga un (H ga lga lga an o (Ro oc l n( (Ro Bu (H ta R un st (H R feh Bu ara un B st om ( (Bu ap (Bu ti ( tan s( are ce n( olc pe va (H ea iv (H a( ed ov es iso j-N bre ies vd ve aio da Rank fia ch ns ad isk se or eg rn ek cs as Tim Clu Plo Plo Ple Ias De Gy Co Bu Bu Bu Ru Va So Or Pe Sz Sz Cr Br M 1 Indicator with highest ranking Indicator with lowest ranking 22 Source: Doing Business database. represented by Sofia, would move up in streamlined process requiring no regis- 14 months or less. The two Romanian the global ranking. tration with the municipality. exceptions, Brasov and Ploiesti, have longer delays during the trial stage, Similar differences are revealed among Pecs is not only the Hungarian cham- high up-front enforcement costs and Romanian cities in enforcing contracts. pion in dealing with construction permits; lower scores on the quality of judicial The distance to frontier score differs along with Szeged, it also outperforms processes index. by 12 points between Timisoara and the EU average in this area. Pecs requires Brasov. Timisoara’s score (76.13) the fewest procedures and, thanks in No city is close to the EU average in would be the second best among EU part to good staffing levels at the chief getting electricity, however. Obtaining a member states, behind only Lithuania. architect’s office, issues building and new connection takes longer in all three Meanwhile, Brasov’s score (64.24) is occupancy permits faster than any of the countries than it does in any other EU lower than the EU average. Timisoara other Hungarian cities. member state. Even in Iasi (Romania), benefits from having a separate com- with the fastest process among the 22 mercial division and a more sophis- Hungarian cities stand out on the ease cities benchmarked, an entrepreneur ticated electronic case management of registering property—thanks to a needs to wait almost three months system in its court. In Brasov, which streamlined process for property trans- longer than the EU average and five lacks these elements, resolving and fers and high scores on the quality of months longer than in the fastest EU enforcing a commercial claim takes land administration index—but Oradea economies (Austria and Germany). nearly eight months longer. (Romania) also manages to outdo the EU average. While cadastral records in When comparing performance at the Romania are kept largely in paper for- THE WAY FORWARD European and global level, one observa- mat, Oradea has scanned the majority tion stands out: each country has at of its records. When an economy is ailing, the eco- least one city that outperforms the EU nomic discourse usually turns to the average in at least one area (figure 1.6). All the cities in Bulgaria and Hungary, fiscal and monetary policies that the Two Bulgarian cities, Varna and Pleven, and most in Romania, outperform the government could deploy. Less atten- surpass the EU average for starting a EU average in enforcing contracts. tion is given to the nuts and bolts that business—the only ones among the 22 Indeed, Debrecen, Miskolc and hold the economy together—such as cities to do so. These two cities ben- Szekesfehervar in Hungary outperform the regulations that govern business efit from low start-up costs, faster value Lithuania, the EU’s best performer, licensing, real estate transactions or added tax (VAT) registration and a more thanks to low costs and speedy trials of the provision of basic utility services. OVERVIEW 7 FIGURE 1.5  Marked performance gaps in dealing with construction permits, getting and encourage governments to look electricity and enforcing contracts outward to learn from global good prac- tices. Subnational Doing Business reports Distance to frontier score (0–100) remind countries that it is also good 100 Dealing with construction permits in Hungary to look inward. Good practices can be Top 40 economies globally found beyond the largest business city. 80 (75.72 and above) EU average (74.14) And any city will find it harder to say Pecs (75.58) Budapest (67.89) that it cannot improve its practices if 60 another city facing the same regula- 40 tory conditions is providing the business community with services that are more 20 efficient, less costly and higher quality. 0 This report highlights differences both among and within countries. Differences Distance to frontier score (0–100) in regulatory performance across loca- 100 Getting electricity in Bulgaria tions can help national and local policy 80 EU average (81.32) makers to identify priority areas for reform and to find good practices that can guide 60 Burgas (65.49) Top 100 economies the way forward. Good local and global globally (68.19 and above) Sofia (54.64) practices are identified throughout the 40 report, as well as opportunities for regu- latory reform in each country (table 1.2). 20 Some common themes emerge in 0 looking at aspects needing improve- Distance to frontier score (0–100) ment. One is procedural complexity. 100 Enforcing contracts in Romania With some exceptions, most of the 22 Top 10 economies globally cities have processes for starting a 80 Timisoara (76.13) (75.49 and above) business, dealing with construction EU average (66.63) permits, registering property and get- 60 Brasov (64.24) ting electricity that are more complex 40 than the EU average.8 In Bulgaria an entrepreneur has to complete eight Highest distance to 20 frontier score procedures to transfer property, almost Lowest distance to twice as many as the EU average. frontier score 0 Complying with the municipal tax requirements alone requires two pro- Source: Doing Business database. cedures. Similarly, builders in Romania Note: The distance to frontier score shows how far a location is from the best performance achieved by any economy need to obtain at least six different pre- on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier of construction documents and approvals best practices (the higher the score, the better). The averages for the EU are based on economy-level data for the 28 EU member states. before getting a construction permit, including clearances from the Health Yet the effect of the much talked about national government may take pains to Department, the Environment Agency fiscal and monetary measures can be design regulations that make it easier and the Inspectorate of Emergency stymied if these nuts and bolts do not for entrepreneurs to start and operate Situations. To streamline the process, work properly. Getting business regula- a business. But it is how these regula- local officials could learn from Craiova’s tions right—by striking the right balance tions are implemented on the front practice of convening representatives between enabling the private sector to lines that matters. of all utility providers to decide which flourish and achieving public policy approvals are needed. Its City Hall will goals—requires a coordinated effort by The annual Doing Business report aims to even obtain all the clearances on behalf policy makers and policy implement- draw attention to how red tape affects of the applicant for an extra process- ers at all levels of government. The small and medium-size businesses ing fee. Policy makers could also look 8 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 1.6  At least one city in each country outperforms the EU average in at least one area measured Global percentile of distance to frontier scores 100 Other 20 cities Top 25% All 7 Hungarian cities of economies Pecs (Hungary) Oradea (Romania) Ploiesti (Romania) 75 Pleven, Varna Szeged (Hungary) Brasov (Romania) (Bulgaria) Other 14 cities Other 20 cities 50 Other 20 cities All 22 cities 25 Bottom 25% of economies 0 Starting a Dealing with Getting Registering Enforcing EU average business construction permits electricity property contracts Source: Doing Business database. Note: The global percentiles are based on the Doing Business global sample of 190 economies. The averages for the EU are based on economy-level data for the 28 EU member states. abroad. For example, Georgia’s move to significantly more cases than those in the yet has faster contract enforcement than group all nonutility agencies providing faster courts of Pleven and Ruse.10 This those with 20–40% fewer cases. Sofia clearances in a one-stop shop not only higher volume exacerbates problems deals with substantially more building streamlined procedures but also cut the with information technology infrastruc- permit applications than any of the other time for the preconstruction approval ture and internal processes, making Sofia cities in Bulgaria, yet manages to achieve process from 70 days to 15. the city with the biggest court delays. faster approval times because of the Issues with uneven caseload distribution availability of fast-track services, though A second common theme is uneven in Bulgaria are well known and have been these come with higher fees (making transaction volumes, which also appear raised by the European Commission and Sofia’s construction permitting process to affect performance in some cities. In the World Bank.11 the most expensive among the Bulgarian Sofia, for example, the higher volume of cities). property sale transactions contributes to Not all cities with higher transaction longer waiting times for property trans- volumes struggle. Good management, Another common theme is the use fers than in the other Bulgarian cities. well-trained staff and efficient internal of information technology systems Similarly, in Budapest the heavy workload processes can do much to alleviate issues to increase efficiency and provide of the chief architect’s office means a associated with higher volumes, with e-government services. Bulgaria and wait for the urban planning approval that no need to assign additional resources. Romania have both implemented elec- is twice as long as in the other Hungarian Despite having more property sale trans- tronic filing for company registration, cities: one month rather than two weeks actions than all six other Hungarian cities with different levels of success. While on average. Among Romanian cities, combined,12 Budapest completes prop- in Bulgaria almost three-quarters of new Ploiesti has greater difficulties dealing erty transfers faster than Pecs, where limited liability companies are registered with its caseload, which is second only to volumes are low. In Romania large cities online,14 in Romania the share is less than Bucharest’s;9 the time from filing a com- such as Bucharest and Timisoara issue 1% in many cities.15 To increase take-up, plaint to obtaining a judgment in Ploiesti the VAT taxpayer identification number Romanian cities could first look to the amounts to 16 months, the second faster than others. Bucharest has a higher example of Constanta, where thanks to longest among all 22 cities covered. And caseload per judge in its first-instance outreach by the chamber of commerce in Bulgaria, judges in Sofia’s courts have courts than the other Romanian cities,13 take-up has reached 24%. Then they OVERVIEW 9 TABLE 1.2  Potential opportunities for improvement in Bulgaria, Hungary and Romania Romania Hungary Regulatory Bulgaria area Reform recommendations ● ● Simplify VAT registration ● Promote online business registration and eliminate the need for a visit to the commercial registry to collect the certificate of incorporation ● Reduce or eliminate the paid-in minimum capital requirement for limited liability companies Starting ● ● Make the involvement of legal intermediaries (lawyers, notaries) in company formation optional a business ● ● Review municipal requirements ● ● Expand online platform to include social security and labor registrations ● ● ● Review whether certain requirements (such as membership in the chamber of commerce and depositing the symbolic minimum capital with a bank) can be eliminated for small and medium-size businesses ● ● Introduce a unique business identification number ● ● ● Consolidate requirements and regulations for the construction permitting process ● ● ● Fully adopt a risk-based approach to environmental approvals ● ● Review the cost structure for building permits ● ● Streamline the process for preconstruction approvals Dealing with ● ● Expand electronic platforms throughout the construction permitting process construction ● Clarify the responsibilities of supervisory agents relative to municipalities and other stakeholders in the construction permitting permits process ● Consolidate final inspections and approvals upon completion of construction ● Look for easy ways to simplify construction permitting, such as extending the validity of the land registry excerpt and eliminating requirements for documents that the requesting agency should already have as well as the need for verification by the Order of Architects ● ● ● Introduce silence-is-consent rules and risk-based approaches to reduce delays in preconnection approvals ● ● ● Organize back-office preconnection approvals internally ● ● Identify opportunities to simplify requirements, such as the signing of contractor and easement agreements as well as requests Getting for preapproval and approval of connections electricity ● ● ● Clarify and better communicate the process and requirements for getting electricity ● ● Review the cost of obtaining a new connection ● ● ● Strengthen the incentives for reliable power supply ● ● Update local and national tax information internally by linking systems across institutions ● ● Eliminate the requirement to verify legal good standing with the commercial registry ● ● Assess the feasibility of reducing property transfer taxes Registering ● ● ● Introduce standardized contracts for property transfers and consider making the use of lawyers or notaries optional property ● ● Expand cadastral or property registration coverage ● ● ● Create an electronic platform for property transfers ● ● Introduce mechanisms for dealing efficiently with land disputes ● ● ● Publish annual statistics on completed transactions and land disputes ● ● ● Actively manage the pretrial phase ● ● ● Set legal limits to the granting of adjournments ● ● ● Simplify the calculation and review of court fees Enforcing ● ● Make judgments at all levels available online contracts ● ● Introduce electronic filing and improve electronic payments ● Introduce small claims court or simplified small claims procedures ● ● Use case data assessments with a view to rebalancing workloads Note: All reform recommendations are detailed in the “What can be improved?” section of the corresponding chapter. 10 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA could look to Bulgaria, which offers lower legal professionals or institutions such distance to frontier score more than 5 fees for online registration to encourage as banks, driving up the costs of these points higher than the current score for use of this option. transactions. Hungary (as represented by Budapest). This hypothetical city would have a Meanwhile, Romania has an elec- Cities can make big gains in com- global ranking of 98, 23 places higher tronic case management system in petitiveness by replicating good practices than Hungary’s current ranking of 121. place throughout the country, though within their own country (figure 1.7). And Similarly, a city adopting the best prac- some courts have used its features more because Sofia, Budapest and Bucharest tices within Hungary in dealing with effectively than others. Some have even (as their country’s largest business city) construction permits would be at 42 in designed their own software add-ons. represent Bulgaria, Hungary and Romania the global ranking, just below Finland One example is the “Infodosar” software in the Doing Business global ranking, and ahead of Norway. developed by the courts in Cluj-Napoca improvements in these cities would be and Timisoara, which allows litigants reflected in their country’s rankings. Save A Romanian city adopting the court greater access to court documents. In for business start-up in Romania—where efficiency of Timisoara and the costs of Bulgaria, by contrast, Sofia has different Bucharest already ranks at the top among Iasi, where attorney fees are low, would software than the other cities and more the nine cities covered—gains would rank among the top 10 economies glob- limited features for court users. be made in every area across the three ally on the ease of enforcing contracts. In countries. Timisoara judges leverage the electronic Hungary leads the way in e-government case management system to ease admin- services. All new companies have been Indeed, if Bulgaria were represented in the istrative burdens. They also complete the registered electronically since 2008, area of starting a business not by Sofia filing phase faster, because they are less when electronic registration was made but by Varna—where start-up takes nine likely than judges in the other Romanian mandatory. Information technology sys- days fewer and requires no registration cities to request revisions to the initial tems have been put in place in the courts, with the municipality—the country would complaint. where electronic filing is mandatory for see its distance to frontier score increase commercial lawsuits and there is a well- by almost 4 points and would jump 25 The potential gains are more modest functioning electronic case management places in the ranking, from 82 to 57. in the area of registering property. In system. In addition, electronic platforms all three countries a hypothetical city are in place for construction permitting In getting electricity, a Hungarian city adopting local good practices in this and property registration. But the use of reaching efficiency levels as high as area would have a distance to frontier the systems for business incorporation Szekesfehervar’s and reliability of sup- score only 1 point higher on average and property transfers is restricted to ply as good as Szeged’s would have a than its country’s current score. FIGURE 1.7  If all local good practices were adopted, the global performance of each country would improve Bulgaria Hungary Romania Actual DTF score Hypothetical best DTF score Actual DTF score Hypothetical best DTF score Actual DTF score Hypothetical best DTF score 90.56 89.53 89.53 86.82 87.28 87.61 81.72 80.08 81.16 77.42 77.25 75.66 75.48 76.24 74.65 72.75 73.75 71.53 72.25 69.23 68.43 68.66 67.89 65.94 67.04 63.25 58.09 57.89 54.64 53.23 Starting a business Dealing with construction permits Getting electricity Registering property Enforcing contracts Source: Doing Business database. Note: For the actual distance to frontier (DTF) score, each country is represented by its capital city (which is also its largest business city). The hypothetical DTF score is based on the best performances recorded among the benchmarked cities within a country. The DTF score shows how far on average a location is from the best performance achieved by any economy on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). OVERVIEW 11 Other countries offer examples of how show that the states making a greater across the country. Numerous amend- peer-to-peer learning works. In Italy, fol- effort to maintain a dialogue with their ments and inconsistent dissemination lowing the publication of Doing Business peers also have a better regulatory envi- had resulted in confusion and uneven in Italy 2013, the minister of justice used ronment as measured by Doing Business implementation across cities. As a city subnational data in her official speech (figure 1.8). official from Olsztyn put it, “The regula- inaugurating the 2013 judicial year. The tion is complex and open to interpreta- minister gave her speech in Turin, the Mexican authorities have also gone a tion. Builders would shop around for city with the number 1 ranking on the step further. The Ministry of Economy municipal officials willing to interpret ease of enforcing contracts, to showcase uses Doing Business and other indicators the rules more leniently. We had to issue its court as a good-practice example for for monitoring and evaluation purposes. more than 20 guidelines to ensure uni- other Italian courts. Its funding vehicle Fondo PYME offers form interpretation in the application of subsidies to states and municipalities the law in our city.” Making the law more Another example comes from Mexico, that implement regulatory reform proj- cohesive, communicating legislative where the Federal Commission for ects to improve their investment climate changes to all stakeholders—enforce- Regulatory Improvement (COFEMER) and competitiveness. Improvement in ment agencies, business and legal com- organizes a biannual conference allow- the indicators is included in the terms munities and the general public—and ing every state to share its experience of reference for locations seeking funds. providing guidelines on how to interpret in improving regulation. Peer learning the law became priorities for the Polish also takes place when local policy mak- Consultation with stakeholders is government in ensuring that the changes ers visit neighboring states and cities. another key part of the regulatory were understood and put into practice. For example, policy makers from the reform process. Take Poland. The sub- state of Colima visited Sinaloa to learn national findings in Doing Business in Similarly, Hungary’s government is using about that state’s electronic system for Poland 2015 formed a basis for dialogue interagency and public-private dialogue issuing land use authorizations. Soon between national and local policy mak- to help drive regulatory improvements. Colima set up a similar system on its ers to ensure the effective rollout and Concerned about keeping the econo- own website. Not surprisingly, data implementation of the new Building Law my’s growth rate at the 3–4% level, the government has identified red tape as an issue.16 In October 2016 it created FIGURE 1.8  Mexican states doing more to maintain a dialogue with their peers have a better business regulatory environment the National Competitiveness Council to propose measures for improving Average distance to frontier score for the four areas measured (0–100) competitiveness, supporting small and 100 medium-size enterprises and address- ing labor market and wage challenges. Colima The council is formed of representa- 90 Aguascalientes tives of academia, chambers of com- Guanajuato merce and industry, and the Hungarian 80 Investment Promotion Agency as well as private companies. Without under- State of Mexico 70 Puebla standing the private sector’s concerns Tamaulipas Durango and the barriers that prevent businesses from starting, operating and growing, 60 no government can claim to have set up a comprehensive reform agenda that 50 will make a real difference for the busi- Baja California Morelos nesses in its country. 40 Mexico City While there is no “one size fits all” 0 1 2 3 4 5 6 7 8 approach to regulatory reform and every Number of states contacted jurisdiction has a unique path, many successful reformers establish high-level Source: Doing Business database, based on data obtained in November 2013 during consultative meetings with oversight committees in charge of priori- authorities from Mexican states. tizing the reform agenda and maintain- Note: The correlation between the distance to frontier score and the number of states contacted by other states is 0.53, and the relationship is significant at the 1% level. ing the reform momentum. Successful 12 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA reformers also assign clear accountabil- 16. Ministry of National Economy of Hungary, NOTES “National Competitiveness Council to Ensure ity to policy makers (such as a specific Sustainable Growth,” October 17, 2016, http:// ministry or the prime minister’s office) 1. World Bank Group Data, accessed May 5, www.kormany.hu/en/ministry-for-national in the reform process. Technical work- -economy/news/national-competitiveness 2017, http:/ /data.worldbank.org/indicator/. -council-to-ensure-sustainable-growth. ing groups then lead implementation at 2. Trading Economics database, accessed April 19, 2017, http://www.tradingeconomics.com. the agency level. The most successful 3. “Unemployment Statistics,” Eurostat, accessed technical committees have representa- April 19, 2017, http:/ /ec.europa.eu tives from all key agencies involved in a /eurostat/statistics-explained/index.php /Unemployment_statistics. particular area, as well as knowledgeable 4. European Commission, Regional Policy for members of the private sector. Smart Growth of SMEs: Guide for Managing Authorities and Bodies in Charge of the Development and Implementation of Research The findings of this study provide an and Innovation Strategies for Smart Specialisation opportunity for policy makers in Bulgaria, (Brussels: European Commission, 2013), Hungary and Romania to address http://ec.europa.eu/regional_policy/sources /docgener/studies/pdf/sme_guide/sme impediments in the investment climate _guide_en.pdf. by leveraging examples within each of 5. Previous studies include Doing Business in these countries as well as across the EU. Poland 2015, Doing Business in Spain 2015 and Doing Business in Italy 2013. There is plenty to be optimistic about, 6. Burgas, Pleven, Plovdiv, Ruse, Sofia and Varna with each country excelling in different in Bulgaria; Budapest, Debrecen, Gyor, Miskolc, areas. There is room to work not just Pecs, Szeged and Szekesfehervar in Hungary; Brasov, Bucharest, Cluj-Napoca, Constanta, incrementally but boldly, with compre- Craiova, Iasi, Oradea, Ploiesti and Timisoara in hensive measures. Formulating an ambi- Romania. tious plan, with clear responsibilities 7. Statistics provided by the Hungarian Department of Land Administration and goals for improvement, would be a (Foldhivatal). first step in addressing the challenges. 8. The Hungarian cities have a number of Promoting convergence among regions procedures that is lower than the EU average for registering property and on par with the EU and cities toward top performers—and average for getting electricity. The Bulgarian thus improving the ease of doing busi- cities have a number of procedures that is on ness across the country—is a worthy par with the EU average for starting a business. 9. Romanian Superior Council of Magistracy, undertaking, and it will bring dispropor- Rapoarte privind starea justiţiei (Report on the tionate benefits for small firms. Status of Justice for the Year 2015), annex I, http://www.csm1909.ro. 10. Supreme Judicial Council of Bulgaria, “Civil Caseload Data per Judge for 2015,” appendix 83 in Summarized Statistic Tables for Court Activities for the Year 2015, available at http:// www.vss.justice.bg/page/view/1082. 11. European Commission, “Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Co-operation and Verification Mechanism,” COM(2017) 43 final (European Commission, Brussels, 2017), https:/ /ec.europa.eu/info /effective-justice/rule-law/assistance -bulgaria-and-romania-under-cvm/reports -progress-bulgaria-and-romania_en; World Bank, “Bulgaria Judicial Performance, Caseload and Expenditure Review (2008–2014)” (World Bank, Washington, DC, 2015). 12. Statistics provided by the Hungarian Department of Land Administration (Foldhivatal). 13. Romanian Superior Council of Magistracy, Rapoarte privind starea justiţiei (Report on the Status of Justice for the Year 2015), annex I, http://www.csm1909.ro. 14. Statistics provided by the Commercial Register at the Registry Agency, Bulgaria. 15. Statistics provided by the National Trade Registry Office, Romania. Summary of Indicator Findings: Subnational Variation in Regulatory Performance ƒƒ Among the six cities benchmarked in Bulgaria, Ruse leads in the areas of registering property and enforcing contracts, Burgas in getting electricity. Varna stands out for efficient business registration, and Sofia for its relatively fast construction permitting process. ƒƒ Among the seven cities benchmarked in Hungary, Debrecen stands out for its good practices in contract enforcement and for its efficient property registration. Szeged leads in the area of getting electricity, and Pecs in construction permitting. ƒƒ Among the nine cities benchmarked in Romania, Iasi leads in the area of getting electricity, while Craiova stands out for its good practices in construction permitting, Timisoara for its performance in contract enforcement, and Oradea for its greater quality of land administration. 14 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA A ll cities in Bulgaria share the To make starting a business easier, Bulgaria per capita1—almost twice the EU aver- same regulatory framework—as could follow Hungary’s example and age of 3.7%, a figure that includes top do those in Hungary and those consolidate VAT registration with business performers such as Slovenia (no cost), in Romania. The subnational variation and income tax registration at the Registry Denmark (0.2%) and Austria (0.3%). uncovered by this report is therefore Agency. Rather than imposing a separate driven by other factors. One is differenc- municipal registration, Ruse and Sofia could Variations in performance within Hungary es in the resources and efficiency levels obtain data on all companies registered in are marginal and stem mainly from differ- of the local offices of public agencies, their jurisdiction from the Registry Agency ences in lawyer fees. Companies must especially evident in the areas of start- and, using a risk-based system to clas- hire a lawyer to prepare and submit their ing a business, registering property and sify business activities, decide whether an registration documents through an online enforcing contracts. Another is variation inspection is needed. platform. Legal fees are subject to nego- in the efficiency levels of municipal tiation. If standard incorporation docu- authorities, which manage most of Hungary ments are used, the fees range from HUF the process in the area of dealing with In Hungary the start-up process is 160,000 (EUR 516) in Debrecen, Miskolc construction permits. A third factor relatively fast but expensive. Across all and Pecs to HUF 180,000 (EUR 581) in relates to getting electricity. As a result seven cities surveyed, starting a business Budapest. In addition, entrepreneurs set- of the liberalization of energy markets, involves completing the same six proce- ting up a limited liability company need different distribution utilities operate in dures, which takes six or seven days. The to deposit capital of almost EUR 5,000— different regions of each country. This cost ranges from 6.5% to 7.1% of income the equivalent of 45.5% of income per leads to differences among cities both in the efficiency of the process to obtain a new electricity connection and in the FIGURE 2.1  The time required to start a business varies substantially among cities in Bulgaria and Romania quality of electricity supply. 0 5 10 15 20 25 WHERE IS STARTING A Debrecen 6 6.5 BUSINESS EASIER? Miskolc 6 6.5 Time (days) Pecs 6 6.5 Bulgaria Szeged 6 6.8 In Bulgaria starting a business is easiest Gyor 6.8 7 Cost (% of income in Varna, where it takes five procedures 6.8 7 per capita) Szekesfehervar and 14 days—and most difficult in Sofia, Budapest 7 7.1 where it requires six procedures and 23 Bucharest 1.5 12 days (figure 2.1). Indeed, if represented by Varna rather than Sofia in the Doing Oradea 1.5 12 Business global ranking, Bulgaria would Ploiesti 1.5 12 jump 25 places, from 82 to 57. The main Timisoara 1.5 12 factor driving the variation is differences Varna 1.3 14 in municipal requirements. In Ruse and Pleven 1.8 14 Sofia all newly incorporated companies Brasov 1.5 15 need to inform the municipality about Cluj-Napoca 1.5 15 the type of activity they perform and Burgas 1.3 16 the start of their operations. While a simple notification suffices in Ruse, in Plovdiv 1.3 16 Sofia an inspector is dispatched to check Ruse 1.3 17 the company premises, after which the Iasi 1.5 17 company is registered in the municipal Constanta 1.5 20 business registry within seven days. Sofia 1.3 23 The other factor behind the variation in Craiova 1.5 25 Bulgaria is the time it takes to register for value added tax (VAT): applicants wait 10 Hungarian city Bulgarian city Romanian city days in Pleven and Varna—and 12 days in the other cities. Source: Doing Business database. SUMMARY OF INDICATOR FINDINGS: SUBNATIONAL VARIATION IN REGULATORY PERFORMANCE 15 capita, the highest such requirement in done in Bulgaria, where almost three- providing services should be based not on the European Union—if they want to limit quarters of new limited liability companies the size of the building but on the cost of their personal liability. register electronically. providing the services. Bulgarian authori- ties could therefore consider charging a To make business start-up easier, lower fixed fee for simpler buildings that Hungary could follow Portugal’s example WHERE IS DEALING WITH pose little risk to public health and safety and make the use of legal professionals CONSTRUCTION PERMITS and a higher fixed fee for larger projects. optional for companies using standard EASIER—AND THE QUALITY In addition, Bulgaria could benefit from incorporation documents. Providing OF BUILDING REGULATION learning from other countries, such as public access to the business registration HIGHER? Hungary, that have adopted electronic system would allow significant cost sav- platforms at all stages of the construction ings for small businesses. Bulgaria permitting process. In Bulgaria completing the construction Romania permitting process for a simple ware- Hungary In Romania starting a business anywhere house, including connecting it to water In Hungary dealing with construction per- in the country requires the same six pro- and sewerage, requires 18 procedures in mits is easiest and least time-consuming cedures and the same fees—equivalent to Pleven, Ruse and Sofia but 20 in Plovdiv. in Pecs, where it requires 17 procedures 1.5% of income per capita.2 Yet the time it The variation stems in part from the num- and about five months. The city stands out takes varies widely among the nine cities ber of requirements for obtaining a water for its speedy process for issuing both the benchmarked—from 12 days in four cities and sewerage connection. Among the six building permit and the occupancy permit. (Bucharest, Oradea, Ploiesti and Timisoara) Bulgarian cities, Sofia has the easiest and In Budapest, by contrast, the overall con- to 25 in Craiova. Among EU member fastest construction permitting process, struction permitting process takes about states, only Poland and Malta impose a taking 97 days—largely because it is the seven months. Because of the heavy work- longer wait on entrepreneurs. The main only one offering a fast-track option at load of the chief architect’s office, obtaining factor behind this variation is the time it an additional fee for several municipal the urban planning approval alone takes takes to register for VAT. The procedure is services. Ruse has the slowest construc- a month, compared with an average of fastest in Bucharest, Oradea, Ploiesti and tion permitting process, taking 165 days, two weeks in the other Hungarian cities. Timisoara. In Constanta it takes two weeks, because of the longer wait for a water In addition, Budapest is the only one of and in Craiova almost three. Romania connection and an inefficient approval the Hungarian cities where the water and has introduced several changes aimed at process in the phased inspections during sewerage connections are completed by streamlining the VAT registration process, construction. But Ruse also has the least separate agencies, pushing the total num- one as recently as February 2017. expensive process, costing 1.9% of the ber of procedures up to 20 as compared warehouse value—the only Bulgarian city with the 18 in most of the others. Dealing Online business registration has been where the cost is below the EU average of with construction permits is inexpensive available in Romania since 2012, but it 2.0%. In Sofia the cost amounts to 4.6% across Hungary: it costs an average of 0.5% saves entrepreneurs neither time nor of the warehouse value, reflecting high of the warehouse value, placing the country cost. On average, fewer than 10% of new service fees for expedited procedures. in the top quartile globally. limited liability companies use the online registration platform. Take-up ranges Like Hungary and Romania, Bulgaria The Hungarian cities have good building from less than 1% in most cities to 24% makes its building regulations available regulations and strong quality control in Constanta, where the local chamber of online; requirements are clearly specified; mechanisms, earning them a score of 13 of commerce actively provides assistance proper quality control checks are in place 15 possible points on the building quality to local entrepreneurs. before, during and after construction; control index. The only aspects missing and professionals involved in the quality are a risk-based inspection system and a To ease the start-up process, Romania control process are highly qualified. As a mandatory insurance regime for construc- could follow Hungary’s example and con- result, it scores 13 of 15 possible points on tion practitioners to cover construction solidate VAT registration with business the building quality control index, higher defects. Hungary has adopted electronic and corporate tax registration at the Trade than the EU average of 11.4. platforms throughout the construction Registry. It could also consider introducing permitting process. Building permit incentives to encourage use of the online But room for improvement remains in applications and the accompanying docu- platform. For example, it could offer online Bulgaria. Building permit fees, established mentation can be submitted through an registration at substantially lower fees at the local level by municipalities, depend online portal, while another system—an than paper-based registration—as was on the size of the building. Yet the fees for electronic construction log—serves as a 16 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA journal of construction milestones guiding the City Hall convenes representatives of specified; proper quality control checks are the internal administrative process during all utility companies when processing the in place before, during and after construc- construction. request for the urban planning certificate. tion; and professionals involved in the It then decides which approvals are quality control process are highly qualified. Hungary has a relatively high number of required for the building permit and lists As a result, it scores 13 of the 15 possible procedures that take place after construc- them in the urban planning certificate. points on the building quality control index, tion, seven on average (excluding the utility surpassing the EU average of 11.4. connection). These include three different But Craiova has neither the fastest nor final inspections—from the Fire Protection the least costly construction permitting Moving forward, Romanian cities should Unit, the Public Health Unit and the Building process overall in Romania. Instead, focus on streamlining preconstruction Department. Combining these inspections thanks mainly to a City Hall that oper- clearances, which take on average six into one joint event would simplify the ates very efficiently, Oradea stands out separate steps. Next, they could aim to postconstruction phase. as having the fastest process, requir- centralize all preapprovals at a single ing 156 days. Compare this with the window for the applicant—as Georgia Romania more than 300 days in Constanta and did, cutting 10 steps and 70 days as a Dealing with construction permits in Timisoara. But Oradea also has the most result. In the long run the aim should be Romania can be burdensome (figure 2.2). expensive process: at 7.6% of the ware- to introduce an electronic one-stop shop In Bucharest, with the most streamlined house value, the cost is four times that in where all agencies review the application process, it takes 24 procedures, while in Cluj-Napoca, Craiova or Iasi. In general, online, as in Hungary. Cluj-Napoca, Ploiesti and Timisoara it costs are relatively high in Romania. At requires 27. The main difference among 3.4% of the warehouse value, the aver- the Romanian cities is in obtaining proj- age cost is 1.7 times the EU average, WHERE IS GETTING ect clearances before construction. This largely because of the high approval and ELECTRICITY EASIER—AND process is most efficient in Craiova, the building permit fees. THE POWER SUPPLY MORE Romanian city that has advanced furthest RELIABLE? toward global good practices in con- Like Bulgaria and Hungary, however, struction permitting (as reflected in its Romania makes its building regulations Bulgaria distance to frontier score of 61.31). There available online; requirements are clearly In the six cities benchmarked in Bulgaria, connecting a new warehouse to the electricity network requires on average FIGURE 2.2  Obtaining a building permit takes the least time on average in Romanian cities—but obtaining other preconstruction approvals the most time five procedures and 236 days and costs 244.6% of income per capita. Averaged Average time (days) across the six cities, the time for getting 102 electricity ranks the country among the bottom three EU member states on this indicator, together with Hungary and Romania. Based on the quality of services provided by distribution utilities and sup- pliers, the Bulgarian cities score an average 59 56 5.7 of 8 possible points on the reliability of 50 supply and transparency of tariffs index. 45 41 42 38 32 31 Among the six Bulgarian cities, Burgas has the best performance in the area of 18 getting electricity thanks to a high score 15 on the reliability of supply and transpar- ency of tariffs index as well as the second most efficient connection process. Varna Obtaining all documents Obtaining building Undergoing final Obtaining water and approvals required permit approvals and and sewerage has the most efficient process, taking for building permit registering building connections five procedures and 200 days. Getting Hungarian cities Bulgarian cities Romanian cities electricity is most difficult in Sofia, where it requires one more procedure and two Source: Doing Business database. more months. SUMMARY OF INDICATOR FINDINGS: SUBNATIONAL VARIATION IN REGULATORY PERFORMANCE 17 Differences lie in the approval of the proj- Szeged, where customers experience Romania ect design and in the type of connection on average less than one outage a year, In Romania getting electricity takes on needed. The process is longer and more for a total duration of one hour, earns average nine procedures, 195 days and complex where the connection is to the the maximum score of 8 on the reliabil- 507.8% of income per capita. The nine medium-voltage network, as is the case ity of supply and transparency of tariffs cities score on average 6.7 of 8 points on in Pleven and Sofia. Because this type of index. At the other end of the spectrum, the reliability of supply and transparency connection involves the installation of a Miskolc, where customers experience of tariffs index. Customers in Bucharest, new substation, getting electricity is also on average 2.2 outages a year, for a total Cluj-Napoca, Constanta, Craiova, Iasi substantially more expensive in Pleven duration of 5.5 hours, earns a score of 6 and Oradea are subject to less frequent (at 516.3% of income per capita) and on the index. and shorter power outages than those in Sofia (523.0%) than in the other four the other four cities benchmarked—and cities (107.1%). Hungary could make the electricity con- these six cities therefore receive a higher nection process faster and more efficient score on the reliability of supply and Burgas and Plovdiv record the highest by tightening the time limits for each transparency of tariffs index. scores among the Bulgarian cities on the agency to issue its clearance and by reliability of supply and transparency of introducing a silence-is-consent rule, so Among the Romanian cities, establishing tariffs index, 7 of 8 points. Pleven and that when the approving authority fails a new connection is easiest in Iasi (figure Sofia follow with 6 points. Ruse and to respond within the given time frame, 2.3), where it takes eight procedures and Varna—where the electricity supply is approval is automatically granted. 173 days, and most difficult in Timisoara, less reliable and the distribution util- ity does not use automated systems to monitor outages and restore service— FIGURE 2.3  Getting electricity is a faster process in Romanian cities—but also a receive 4 points. costly one 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 The Bulgarian cities could substantially 173 reduce the time required to obtain an Iasi 463.9 174 electricity connection by establishing Bucharest 546.5 177 one-stop shops allowing entrepre- Craiova 511.1 neurs—or companies acting on their Brasov 181 476.9 behalf—to easily request and receive, 199 Oradea 454.8 without delays, the necessary approv- 200 Varna 107.1 als and authorizations to build the new 202 Cluj-Napoca 473.8 connection. 204 Ploiesti 423.7 209 Hungary Constanta 666.3 Getting electricity in Hungary requires Szekesfehervar 93.9 227 five procedures, takes 244 days on Burgas 107.1 227 average and costs 93.9% of income per Pecs 93.9 230 capita. The seven cities surveyed score an Plovdiv 107.1 231 average 7 of 8 points on the reliability of Miskolc 93.9 233 supply and transparency of tariffs index. 234 Timisoara 553.1 The time required to get a new com- mercial connection ranges from 227 days Szeged 93.9 238 Time (days) in Szekesfehervar to 277 in Gyor. The Ruse 107.1 240 variation is driven by the time needed to Debrecen 93.9 247 obtain all clearances from utilities and Budapest 93.9 257 Cost (% of income public agencies to start the connection Pleven 258 516.3 per capita) works. Collecting these approvals—a task 262 Sofia 523.0 undertaken by distribution utilities—is by Gyor 93.9 277 far the longest and most burdensome step in all the cities. Completing it takes Hungarian city Bulgarian city Romanian city from 200 days in Szekesfehervar to 250 in Gyor. Source: Doing Business database. 18 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA where it requires one more procedure Pleven, Ruse and Varna all score 20 of To make property registration easier, and two more months. The variation in 30 possible points on the quality of land Bulgarian authorities could reduce or time is driven mainly by how long it takes administration index, which measures streamline the requirements by linking to complete the connection works (rang- aspects of the reliability of infrastructure, systems and sharing information across ing from 52 days in Iasi to four months in transparency of information, geographic agencies. If the Property Register or Timisoara) and to obtain a construction coverage, land dispute resolution and cadastre agency could check tax informa- permit for connection works (from one equal access to property rights. Plovdiv tion on properties directly, entrepreneurs month in Bucharest to three months in and Sofia get 1 point less because of in Bulgaria would no longer need to Constanta). Ploiesti has the lowest cost slower land dispute resolution. obtain separate clearances from local and for getting a new connection (423.7% national tax agencies. of income per capita), and Constanta Transaction volumes are partly to blame the highest cost (666.3% of income per for the differences across the Bulgarian Hungary capita). The difference stems mainly cities in the time for property registra- Hungary’s strong performance on both from the cost of the connection works. tion. The Property Register office in Sofia the efficiency and quality of land admin- handles more transactions than the local istration places the country among the Identifying opportunities to reduce the office in any of the other cities. Many of top 10 EU member states on the ease number of steps needed to get an elec- these transactions involve complex, first- of registering property and at 28 in the tricity connection is key to making the time title registration requests, which global ranking (figure 2.4). Among the process easier in Romania, where the clog up the queue and delay other cases seven cities benchmarked, registering a average number of requirements is much as well. property is easiest in Debrecen, where higher than in most advanced econo- it takes four procedures and 8.5 days, mies. All Romanian cities could follow The cost to register a property varies and most difficult in Budapest and Pecs, the example of Iasi, where entrepreneurs with the property transfer tax. National where it takes the same four procedures are not required to sign an easement law allows municipalities to charge from but 17.5 and 18.5 days. The variation declaration in front of a notary nor an 0.1% to 3% of the property value. Varna in time is driven mainly by differences assignment agreement with a contrac- levies the maximum allowable rate of in efficiency among local offices of tor. In addition, the twofold approval 3%, while Ruse charges the lowest rate the Land Administration Department process, requiring the customer to first among the six cities, at 2.2%. Across the (Foldhivatal). obtain a preapproval and then the final Bulgarian cities, property registration is connection contract, could be replaced on average faster and less costly than the Property registration in all seven with one procedure. And introducing a EU average. Hungarian cities takes fewer procedures geographic information system (GIS) would eliminate the need for site visits FIGURE 2.4  Hungarian cities stand out for efficiency and quality in property by distribution utilities. registration, but also for a more expensive process Average distance to frontier score (0–100) WHERE IS REGISTERING 100 PROPERTY EASIER—AND LAND ADMINISTRATION 80 STRONGER? 60 Bulgaria 40 In all six Bulgarian cities, registering a property takes eight procedures, the 20 same as in Belgium and France. This is the second highest number of procedures 0 among EU member states—only Greece Efficiency Cost Quality of land administration requires more (10). Among the six cities, Hungarian cities Bulgarian cities Romanian cities EU average registering a property is easiest in Ruse, where it takes 11 days and costs 2.6% of Source: Doing Business database. the property value—and most difficult in Note: The distance to frontier score for efficiency is the average for procedures and time. The distance to frontier score shows how far a location is from the best performance achieved by any economy on each Doing Business Sofia, where it takes 19 days and costs indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the 2.9% of the property value. Burgas, higher the score, the better). The averages for the EU are based on economy-level data for the 28 EU member states. SUMMARY OF INDICATOR FINDINGS: SUBNATIONAL VARIATION IN REGULATORY PERFORMANCE 19 and less time than the EU average of five remain in paper format, while the other calculation of the filing fee to the judge so procedures and 24 days. The cost is the cities have digitized their land records. as to avoid making mistakes. This com- same 5% of the property value across pounds delays by imposing even more all the Hungarian cities—higher than in Moving forward, Romanian cities should steps on an already overburdened court, the cities benchmarked in Bulgaria and continue to digitize both land registry and and backlogs make it difficult to provide Romania, and slightly higher than the EU cadastre records. Having fully digitized a prompt response to the plaintiff on the average. But the Hungarian cities are set records helps make property transfers correct fee. apart by the reliability of infrastructure in not only easier but also more secure. In the land administration system as well as addition, the authorities should continue Performance on the quality of judicial by the geographic coverage of Foldhivatal. their effort to register all properties by processes index varies among the six They score 26 of 30 points on the quality 2023, a goal set in the government’s Bulgarian cities, with three outperform- of land administration index—the high- National Program for Cadastre and Land ing the EU average and Burgas, Pleven est score among the 22 cities covered Registration. Today only 23% of proper- and Sofia underperforming the average. in this report. Indeed, the score is only ties in Romania are registered—53% of The regional courts in Burgas and Pleven 3 points shy of Singapore’s, the highest properties in urban areas and 16% in rural lack judges who exclusively hear com- globally, and 2.5 points shy of the scores areas.3 mercial cases, and Sofia’s electronic case for Lithuania and the Netherlands, the management system has fewer features highest among EU member states. than those in the other cities. WHERE IS ENFORCING To make registering property easier, CONTRACTS EASIER—AND Besides redistributing judges and clerks Hungary could open its electronic plat- THE QUALITY OF JUDICIAL to better meet demand in courts across form for property transfers (TakarNet) PROCESSES HIGHER? the country, Bulgaria could consider to the general public. Today the platform introducing small claims courts or pro- is accessible only to authorized users Bulgaria cedures to make better use of resources. (bailiffs, notaries, lawyers, financial insti- On average across the six Bulgarian cities, These help expedite the resolution of tutions), for a fee. Eventually Hungarian enforcing a contract through a local court minor disputes of relatively low value by authorities could make the use of lawyers takes 395 days and costs 17.9% of the setting aside many legal formalities and optional in property transfers and put the claim amount. The process is among the using simplified or fast-track procedures. entire process online. fastest in the EU and less costly than the EU average, though attorney fees are near- Hungary Romania ly twice as high as in Hungary. If Bulgaria All seven Hungarian cities outperform In all nine Romanian cities, registering a (as represented by Sofia) had reached the the EU average on the cost to enforce property takes six procedures and 16 days average performances observed in the a contract and on the quality of judicial and costs 1.4% of the property value. The country on the time and cost to enforce processes index. The greatest differences national legal time limits are uniformly a contract and the quality of judicial pro- among the cities in enforcing contracts enforced across all cities. But small varia- cesses index, it would have ranked among is in the time required (figure 2.5). All tions arise in the cost of obtaining a fiscal the top 25 on the ease of enforcing con- the cities except Budapest and Gyor certificate from the municipality. Brasov, tracts in Doing Business 2017. And if it had have faster contract enforcement times Bucharest, Craiova and Timisoara issue reached the best performances, it would than the EU average. Judges in Budapest this certificate at no cost, while Ploiesti have ranked among the top 10. handle the largest number of commercial charges the highest amount, RON 115. cases, and the cases tend to be more Among the six Bulgarian cities, enforc- complex. Those in Gyor are more likely to Property registration in the Romanian ing a contract is easiest in Ruse, where handle cases with international implica- cities takes over a week less than the EU it takes less than 11 months, and most tions, given the city’s proximity to the average, and costs almost 3.4 percentage difficult in the largest city, Sofia, where border, and these cases also tend to be points less as a share of the property it takes nearly 19 months. The Sofia more complex. value. But Romanian cities lag behind the Regional Court is a special case because EU average on the quality of land admin- its judges have substantially higher case- Hungarian cities benefit from low attor- istration index, with most scoring 17 of loads than their counterparts in the other ney fees and low up-front enforcement 30 points. Oradea receives 18 points benchmarked cities. Problems with inter- costs as well as high scores on the quality because of the better state of its cadas- nal work processes exacerbate delays of judicial processes index that reflect tral records. Cluj-Napoca scores 16 points in Sofia. So do problems in calculating advanced electronic services (for filing because the majority of its land records fees. In Sofia plaintiffs tend to leave the and payment) and a well-functioning case 20 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 2.5  In enforcing contracts, the largest differences within each country are in of judicial processes and relatively low the time required—and the smallest in the cost costs compared with the other Romanian cities. Times for filing are fast. Judges Distance to frontier score (0–100) report that they rarely have to ask 100 litigants to amend their complaints. The Quality of judicial courts in Timisoara, along with those in Time Cost processes index Cluj-Napoca, improved litigants’ access 90 BG HU RO BG HU RO BG HU RO to case documents by developing the Pleven “Infodosar” software. 6 cities Debrecen Burgas Iasi In Brasov, with the longest contract Budapest 80 enforcement time among the Romanian All 7 cities 4 cities cities, vacancies in judges’ positions make Ruse it more difficult to deal with caseloads. Timisoara EU average 75.41 Brasov also lacks a specialized com- 70 mercial division at the tribunal level, and Bucharest its electronic case management system 3 cities Sofia EU average provides inadequate access for lawyers. EU average 61.87 62.60 Brasov, Ploiesti has the second-longest contract 60 Ploiesti enforcement time in Romania, at nearly Budapest, Gyor 22 months. Burgas, Brasov Pleven Romania has the highest average cost 50 to enforce a judgment among the three countries, at 6.6% of the claim amount— more than twice the cost in Bulgaria and 0 three times that in Hungary. Bucharest Best performance in country Worst performance in country Country average has both the highest cost in Romania and the fastest enforcement, taking just Source: Doing Business database. over three months. Bailiffs in Romania Note: The distance to frontier score shows how far a location is from the best performance achieved by any economy on each Doing Business indicator. The score is normalized to range from 0 to 100, with 100 representing the frontier often request advances to cover their of best practices (the higher the score, the better). The averages for Bulgaria, Hungary and Romania are based on data expenses in seizing and selling movable for the cities benchmarked in each country. The averages for the EU are based on economy-level data for the 28 EU member states. BG = Bulgaria; HU = Hungary; RO = Romania. assets. management system. Enforcing contracts Held after a case is filed, these informal One of the main bottlenecks in starting in Hungary is easiest in Debrecen and meetings are aimed at clarifying and a trial in Romania is the admissibility of most difficult in Budapest. In Debrecen narrowing the issues in dispute and complaints. In many cities a significant costs are low, and obtaining and enforc- advancing the negotiations of the parties number of complaints are sent back to ing a judgment takes just 11 months. Time toward a settlement. Key elements for the plaintiff for correction, often simply is saved because judges strictly scrutinize an effective pretrial conference include because of errors in the calculation of initial complaints, rejecting outright those allowing the judge to have early and con- the filing fee. Romania could simplify the that have errors or that fail to show good- tinuous control over the progress of the calculation of filing fees and train court faith efforts to reach a settlement before case; developing a realistic, meaningful clerks to check the calculation in com- trial. In addition, hearings are scheduled and binding case timeline; and promoting plaints, freeing up judges’ time for more three days a week rather than only two early settlement of the case while limiting substantive matters. days, as in most of the other Hungarian the scope of the trial.4 cities, and penalties are more likely to be imposed for tardiness in presenting Romania expert testimony—a reduction of 1% of In Romania enforcing a contract is easiest expert fees for every day of delay. in Timisoara, where it takes 15 months— and most difficult in Brasov, where it To increase trial efficiency, Hungary could takes 23 months. Timisoara combines consider introducing pretrial conferences. speedy trials with a relatively high quality SUMMARY OF INDICATOR FINDINGS: SUBNATIONAL VARIATION IN REGULATORY PERFORMANCE 21 NOTES 1. This cost does not reflect the elimination in March 2017 of certain fees and charges (such as stamp duty and publication fees) related to the registration of legal entities, including limited liability companies. 2. This cost does not reflect the recent elimination of registration fees of RON 400 by Law 1/2017, in force since February 1, 2017, which eliminated more than 100 fees and duties. 3. Data obtained from the Romanian National Agency for Cadastre and Land Registration. 4. Heike Gramckow, Omniah Ebeid, Erica Bosio and Jorge Luis Silva Mendez, Good Practices for Courts: Helpful Elements for Good Court Performance and the World Bank’s Quality of Judicial Process Indicators (Washington, DC: World Bank, 2016). Starting a Business MAIN FINDINGS ƒƒ Budapest lags behind other cities in Hungary on the ease of starting a business, and Sofia lags behind in Bulgaria. But in Romania, Bucharest shares the lead with Oradea, Ploiesti and Timisoara. ƒƒ Variations in performance within Hungary are marginal and stem mainly from differences in lawyer fees. In Bulgaria and Romania, however, differences are substantial. ƒƒ If represented by Varna rather than Sofia in the Doing Business global ranking on the ease of starting a business, Bulgaria would jump 25 places, from 82 to 57. Varna is not only the Bulgarian champion; along with Pleven, it also outperforms the European Union average on the efficiency of the start-up process—the only ones among the 22 benchmarked cities to do so. ƒƒ Starting a business in Romania can take anywhere from 12 days in Bucharest, Oradea, Ploiesti and Timisoara to 25 days in Craiova. The gap is due to differences in efficiency among regional branches of the national tax authority in issuing the value added tax identification number. ƒƒ All three countries have implemented electronic filing for company registration. But take-up of the online option remains limited in Romania, ranging from less than 1% in most cities to 24% in Constanta. STARTING A BUSINESS 23 C ompanies in the European Union can register in any member state, WHAT DOES STARTING A BUSINESS MEASURE? regardless of their country of operation or their directors’ nationality. Doing Business measures the number of procedures as well as the time, cost This freedom allows them to take advan- and paid-in minimum capital required for a small to medium-size limited liabil- tage of simpler registration regimes or ity company to start up and formally operate (see figure). To make the data lower start-up costs outside their home comparable across locations, Doing Business uses a standardized limited liability country.1 company that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities This flexibility appeals to Marin and and employs between 10 and 50 people within the first month of operations. Adam, two computer science gradu- Cost ates who have been working together (% of income per capita) for the past few years at a technology Formal operation company in Germany. Having built up savings, business contacts and a roster Paid-in of potential clients, they are planning minimum $ Number of to start their own venture—either in capital procedures Romania, in Marin’s home city of Oradea, or in Hungary, in Adam’s home city of Debrecen. So the first step is to decide Entrepreneur where to register their company. In Time Debrecen they can start operating in six Preregistration Registration, Postregistration (days) incorporation days, while in Oradea they would need to wait one more week. But in Oradea they would need only EUR 162 to cover both registration fees and the minimum capital that must be deposited in a bank.2 FIGURE 3.1  An efficient start-up process is associated with a higher density of new In Debrecen they would have to hire a businesses lawyer, pay around EUR 700 in registra- Log of new business density tion and legal fees and deposit almost 4 High density, low efficiency High density, high efficiency HKG EUR 5,000 as capital if they want to limit their personal liability when setting AUS NZL up a limited liability company (korlátolt BGR felelősségű társaság). Money being of the 2 LUX ROM essence, their choice is not hard to make. BRA ESP HUN ITA SUR Efficient and effective business regula- UGA 0 CAN tions support firm creation and employ- MEX ment. Economies that have a more ARG efficient business registration process TGO also tend to have a higher rate of entry by –2 new firms and greater new business den- BTN sity (figure 3.1).3 Evidence at the country HTI PAK level supports these findings. Take the ZAR case of Portugal, which introduced a Low density, low efficiency Low density, high efficiency –4 one-stop shop for business registration in 20 40 60 80 100 2005 to reduce the regulatory burden for Distance to frontier score for starting a business (0–100) new entrepreneurs. Estimates show that the number of new monthly start-ups Sources: Doing Business database; Entrepreneurship Database, World Bank Group, rose by 17%, and the number of new jobs http://www.doingbusiness.org/data/exploretopics/entrepreneurship. Note: New business density is the number of newly registered businesses per 100,000 working-age adults (ages 15– by 22%.4 Comparable evidence exists at 64). The distance to frontier score is the average for the procedures, time, cost and paid-in minimum capital associated the regional level for Italy: provinces with with starting a business. The score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). The data are for 2012 and 2014 and cover 109 economies. The correlation a longer process for starting a business between the distance to frontier score and new business density is 0.57. The correlation is significant at the 1% level. 24 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA have lower rates of firm creation than responsible for a large share of net job The process of starting a business is those with a more streamlined process.5 creation in the EU. relatively fast but costly in Hungary; Faster business registration is associated the opposite is true in Bulgaria and with more start-ups in industries with the Romania. Across the cities benchmarked strongest potential for growth, such as HOW DOES STARTING in Hungary, the average cost to start a those experiencing technology shifts or A BUSINESS WORK IN business, at 6.7% of income per capita, expansionary global demand.6 Empirical BULGARIA, HUNGARY AND is four times the average in Bulgaria and evidence also suggests that more effi- ROMANIA? Romania and almost twice the EU aver- cient business entry regulations improve age of 3.7%—a figure that includes top firm productivity and macroeconomic In the latest Doing Business ranking of performers such as Slovenia (no cost), performance.7 190 economies on the ease of starting Denmark (0.2%) and Austria (0.3%) a business, more than a third of the top (figure 3.2). But start-up takes only about Not surprisingly, facilitating business 25 are EU member states. Yet there is a week on average in Hungary. In Bulgaria registration has been a focus for many much variation within the EU. Romania and Romania it takes more than two. EU member states. Indeed, since 2010 stands at 62 in the ranking, Hungary at Among EU member states, only Poland, Doing Business has recorded 50 reforms 75 and Bulgaria at 82—all below the EU Malta, and Austria impose a longer wait in the EU reducing the complexity and average of 56, though ahead of Spain on entrepreneurs. cost of business entry regulation in line and Austria. Yet all three countries with global best practices—registering have a distance to frontier score close The number of procedures required to such changes in all but three member to 90 (of a maximum 100), indicating start a business ranges from five in four states.8 Such efforts are particularly that they are not far from global best Bulgarian cities—Burgas, Pleven, Plovdiv important for small and medium-size practices. Their relatively low positions and Varna—to six in the other 18 cities firms, with fewer resources than large in the ranking reflect the tight clustering benchmarked (figure 3.3). Belgium, businesses for dealing with bureaucratic of economies near the top, the result of Estonia, Finland, Ireland, and Sweden inefficiencies. These firms also employ so many having improved their perfor- manage to regulate business start-up a significant number of people and are mance in this area over the years. through only three steps. In Hungary FIGURE 3.2  Starting a business—Bulgarian, Hungarian and Romanian cities in global comparison Procedures Time Cost (number) (days) (% of income per capita) New Zealand 1 New Zealand (global best) Slovenia (EU and global best) 0 (global best) 0 Denmark (EU best) 3 Denmark, Austria Netherlands 4 Finland 1 Macedonia, FYR 2 5 Bulgarian cities 5 6 4 Hungarian cities All 9 Romanian cities 2 Pleven Estonia, Ireland 3 7 Budapest, Gyor, (EU best) 8 Szekesfehervar 9 3 Poland, Slovenia 4 EU average 10 EU average 11 Bucharest, Oradea, 4 12 EU average 5 4 Bulgarian cities Ploiesti, Timisoara Greece, Spain 13 14 Pleven, Varna Spain 5 6 Ruse, Sofia, all 7 Hungarian 15 Brasov, Cluj-Napoca cities, all 9 Romanian cities 16 Burgas, Plovdiv 6 17 Iasi, Ruse 7 Debrecen, Miskolc, Pecs 18 Gyor, Szeged, Szekesfehervar 19 7 Budapest 20 Constanta Austria, 8 Austria Czech Republic 21 8 22 Germany 9 23 Sofia Bulgarian city 24 Poland 12 Hungarian city 25 Craiova 10 Poland 37 Italy 14 Romanian city Source: Doing Business database. Note: The averages for the EU are based on economy-level data for the 28 EU member states. STARTING A BUSINESS 25 FIGURE 3.3  Entrepreneurs complete five to six procedures to start a business in Bulgaria, Hungary or Romania BULGARIA HUNGARY ROMANIA Have company documents notarized Hire lawyer to prepare company documents Obtain evidence of company name reservation Open bank account and deposit Open bank account and deposit paid-in capital paid-in capital Open bank account and deposit paid-in capital Register company (including for Register company (including for corporate corporate income tax) income tax and VAT) Register company (including for corporate income tax) Register for value added tax (VAT) Register for social security Register for VAT Purchase cash register and register it with tax authority Register with chamber of commerce Register with Labor Inspectorate Notify municipality about commercial activity* Register for local business tax Obtain registry for inspections Local authority National authority Private party Source: Doing Business database. * Procedure applies only in Ruse and Sofia. companies must hire a lawyer to register. Among the 22 cities benchmarked in Sofia second to last. The main reason Newly incorporated companies are also this study, starting a business is easiest is an additional requirement in Sofia to obliged to register with local authori- in Varna (Bulgaria) and most difficult in register with the municipality and receive ties in all seven cities benchmarked in Craiova (Romania) (table 3.2). Among an inspection of business premises at Hungary and in two in Bulgaria—Ruse the Romanian cities, Bucharest shares the the start of operations. Similarly, while and Sofia. No local requirements exist in lead with Oradea, Ploiesti and Timisoara, most of the Romanian cities rank among Romania. all with a ranking of 5 among the 22 cities. the top half, Craiova lags behind all other By contrast, the other two capital cities cities. The gap is due to differences in Bulgaria, Hungary and Romania have have the lowest rankings in their country, efficiency among regional branches of undertaken substantial reforms to align with Budapest at 20 and Sofia at 21. the national tax authority in issuing the their regulations and institutions with value added tax (VAT) ID number. the most efficient practices in busi- Variations in performance within Hungary ness registration (table 3.1). All three are marginal and stem mainly from How does the process vary countries introduced one-stop shops differences in lawyer fees. In Bulgaria within Bulgaria? consolidating requirements from several and Romania, however, differences are Among the six cities benchmarked in agencies, created a centralized electron- substantial. The best and worst perform- Bulgaria, starting a business is easiest in ic database for commercial registration, ing cities in Bulgaria are 20 places apart Varna, where it takes five procedures and 14 introduced statutory time limits and in the ranking, with Varna at the top and days—and most difficult in Sofia, where it enabled electronic registration (box 3.1). Hungary made electronic registration mandatory—eliminating paper-based TABLE 3.1  Regulatory reforms have brought Bulgaria, Hungary and Romania closer registration in 2008. Bulgaria now issues to the most efficient practices in business registration every company a single identification Change implemented Bulgaria Hungary Romania (ID) number; used across agencies, this Introduced standardized incorporation documents ü ü ID number facilitates compliance checks Offered business registration functions online ü ü ü throughout the life of the business. Romania no longer requires the use of Introduced a unique business identification number ü legal intermediaries (lawyers, notaries). Reduced or eliminated minimum capital requirements ü ü But all three countries still have a mini- Introduced statutory time limits ü ü ü mum capital requirement. In Bulgaria Created a single interface: the one-stop shopa ü ü ü and Romania, the amount that must be Made involvement of third parties (lawyers, notaries) optional ü deposited as paid-in minimum capital is less than 1% of income per capita; Established a flat fee schedule for business incorporation ü ü ü in Hungary it is 45.5% of income per Source: Doing Business database. capita, the highest in the EU. a. Not all postincorporation procedures are integrated at the registry. 26 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA BOX 3.1 Three markedly different approaches to going digital in company registration in Bulgaria, Hungary and Romania Bulgaria, Hungary and Romania all provide online access to nationwide company information and registration systems. In addi- tion, thanks to information sharing among agencies, business registration includes registration with the tax authority for corpo- rate taxes in all three countries. But the three have taken markedly different approaches with their online business registration systems, resulting in big differences in take-up (see figure). In Hungary, where the use of le- The share of new companies using online registration varies widely among Bulgaria, gal intermediaries is mandatory in Hungary and Romania business registration, lawyers and Percentage of new limited liability companies registered online, notaries have no choice: all reg- January 2015–June 2016 istration applications have had to All Hungarian cities 100.0 be submitted electronically since 2008. Companies can choose be- Sofia 77.4 tween standard or simplified elec- Plovdiv 73.5 tronic filing. The simplified option, Burgas 73.2 with a standard template for the articles of association, costs half as Varna 58.4 much, at HUF 50,000 (EUR 161); Ruse 50.3 it is also much faster (taking 1–2 Pleven 45.7 days as compared with 8–15 for the standard option). More than 90% Constanta 24.4 of firms register with standard ar- Bucharest 6.5 ticles of association.a A Court of Timisoara 3.3 Registration ruling concludes the in- corporation process. If needed, the Cluj-Napoca 1.0 certificate of incorporation can be Brasov 0.8 accessed online and downloaded as Oradea 0.8 a certified electronic copy. Craiova 0.5 Take-up has also been high in many Ploiesti 0.5 cities in Bulgaria, where the online Bulgarian city system began operating in 2009. Iasi 0.2 Romanian city One factor encouraging its use is the lower fees for electronic filing, Sources: Bulgaria, Commercial Register at the Registry Agency; Romania, National Trade Registry Office. set at half the price of paper-based registration (EUR 28 rather than EUR 56). Another possible factor is that clerks at the local commercial registry do not provide guidance on applications. Instead, these are simply scanned and uploaded to the system and then assigned for review and processing to any registry officer in the country who happens to be available. The certificate of incorporation is issued in hard copy or certified electronic copy. In practice, however, Bulgarian companies are rarely required to provide a copy in dealings with institutions of public interest such as courts, banks, notary offices, and state and municipal authorities. The law obliges these institutions to make their own checks of the legal status of companies that provide their unique identification code; officials requesting additional paperwork can be subject to fines. Today almost three-quarters of new limited liability companies in Bulgaria are registered online. Among the benchmarked cities, take-up is highest in Sofia, Plovdiv and Burgas. In Ruse just over half of new limited liability companies use electronic filing. In Pleven the majority still use paper-based registration; while costlier, this is just as fast and easy, because the statutory limit of two days applies regardless of the registration method. One factor slowing take-up in Bulgaria is the still limited use of electronic signatures. In Romania, where online registration has been available since 2012, it saves entrepreneurs neither time nor cost. Moreover, even though the application can be done online, the certificate of incorporation is issued only in hard copy and needs to be picked up in person from the commercial registry. While public institutions can check a company’s status on the commercial registry’s website, they are not obliged to do so by law and therefore usually require the company to provide the relevant documents in hard copy. a. Statistics provided by the National Judicial Office and the Ministry of Justice of Hungary. (continued) STARTING A BUSINESS 27 BOX 3.1 Three markedly different approaches to going digital in company registration in Bulgaria, Hungary and Romania (continued) On average, fewer than 10% of new limited liability companies in Romania use the online registration platform. Take-up ranges from less than 1% in most cities to 24% in Constanta, where the local chamber of commerce actively provides assistance to local entrepreneurs. In Bucharest only 6.5% of limited liability companies incorporated between January 2015 and June 2016 were registered online. Most applicants lack electronic signatures. But the number of online applications is expected to pick up with the introduction of mandatory online tax filing for companies,b which will make electronic signatures increasingly common. Moreover, the recent introduction of express counters at registry offices across Romania—where applications are registered but not checked for accuracy—might lead to fewer in-person applica- tions, since counter assistance will no longer be available. b. While the National Agency of Tax Administration has announced an intention to make online filing mandatory for companies, no formal requirements have been published yet. TABLE 3.2  Starting a business in Bulgaria, Hungary and Romania—where is it easier? Distance to Cost frontier score Procedures Time (% of income Paid-in minimum capital City (Country) Rank (0–100) (number) (days) per capita) (% of income per capita) Varna (Bulgaria) 1 90.56 5 14 1.3 0.0 Pleven (Bulgaria) 2 90.50 5 14 1.8 0.0 Burgas (Bulgaria) 3 90.05 5 16 1.3 0.0 Plovdiv (Bulgaria) 3 90.05 5 16 1.3 0.0 Bucharest (Romania) 5 89.53 6 12 1.5 0.6 Oradea (Romania) 5 89.53 6 12 1.5 0.6 Ploiesti (Romania) 5 89.53 6 12 1.5 0.6 Timisoara (Romania) 5 89.53 6 12 1.5 0.6 Brasov (Romania) 9 88.78 6 15 1.5 0.6 Cluj-Napoca (Romania) 9 88.78 6 15 1.5 0.6 Ruse (Bulgaria) 11 88.33 6 17 1.3 0.0 Iasi (Romania) 12 88.28 6 17 1.5 0.6 Debrecen (Hungary) 13 87.61 6 6 6.5 45.5 Miskolc (Hungary) 13 87.61 6 6 6.5 45.5 Pecs (Hungary) 13 87.61 6 6 6.5 45.5 Szeged (Hungary) 16 87.57 6 6 6.8 45.5 Constanta (Romania) 17 87.52 6 20 1.5 0.6 Gyor (Hungary) 18 87.32 6 7 6.8 45.5 Szekesfehervar (Hungary) 18 87.32 6 7 6.8 45.5 Budapest (Hungary) 20 87.28 6 7 7.1 45.5 Sofia (Bulgaria) 21 86.82 6 23 1.3 0.0 Craiova (Romania) 22 86.27 6 25 1.5 0.6 Source: Doing Business database. Note: Rankings are based on the average distance to frontier score for the procedures, time, cost and paid-in minimum capital associated with starting a business. The distance to frontier score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. 28 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA requires six procedures and 23 days. Indeed, to register for VAT. Business, corporate VAT ID numbers in Pleven and Varna— if represented by Varna rather than Sofia in income tax and statistics registrations can and 12 days in the other cities (box 3.2). the Doing Business global ranking, Bulgaria all be completed at the one-stop shop in would jump 25 places, from 82 to 57. the Registry Agency. But VAT registration The other factor is differences in munic- remained with the tax authority under ipal requirements. In Ruse and Sofia all Two main factors drive the variation in the Ministry of Finance and requires newly incorporated companies need to procedures and time among the six cit- a separate application and evaluation. inform the municipality about the type ies. One is differences in the time it takes Applicants wait 10 days to receive their of activity they perform and the start of BOX 3.2 Is VAT registration set to become easier in Bulgaria and Romania? In Bulgaria and Romania corporate tax registration takes place simultaneously with company registration at the commercial registry. But VAT registration, undertaken voluntarily by many companies at start-up, remains a separate procedure.a Registering for VAT requires that company founders provide considerable information (such as tax records, proof of income, diplomas and summaries of experience, criminal records, and evidence of the adequacy of registered premises for commercial activity). This is evaluated by the tax authority to determine whether the applicant meets the criteria for VAT registration. The measures are meant to prevent tax fraud by ensuring that a company’s founders have no history that might raise questions about its risk. The process can be a long one even for companies deemed to be low risk (see figure), and the outcome is not guaranteed. Still, both countries have taken recent VAT registration is time-consuming across cities in Bulgaria and Romania steps to ease the burden on com- panies. Bulgaria’s National Revenue Bucharest Agency introduced electronic VAT reg- Oradea Bulgarian city istration with qualified electronic sig- Ploiesti Romanian city natures, allowing taxpayers to register Timisoara online. However, most applicants still choose to apply in person.b An ongo- Brasov ing initiative at the National Revenue Cluj-Napoca Agency aims to consolidate VAT regis- Pleven tration with company incorporation at Varna the Registry Agency. Burgas Romania has recently introduced sev- Iasi eral changes aimed at streamlining Plovdiv the process. Ordinance 2393/2016 of the National Agency for Fiscal Ruse Administration (ANAF) simplified Sofia Form 088, which requests information Constanta from applicants that tax officers use Craiova to assess the applicants’ capacity and intention to undertake activities that 0 5 10 15 20 are subject to VAT. The ordinance also Time to register for VAT (days) reduced documentation requirements, allowing company founders to submit Source: Doing Business database. an affidavit rather than the documents that previously had to be attached to the application. But this change did not reduce the time for registration. Instead, it shifted the burden to tax officers, who now have to verify the details in the application by searching different databases, such as those of the commercial registry, the cadastre agency and the insolvency bulletin. Most recently, ANAF Ordinance 210/2017 (in force since February 1, 2017) eliminated Form 088 altogether. In addition, tax officers may no longer reject an application without first allowing the taxpayer 45 days to dispute the decision. It remains too early to assess the impact, if any, of these recent changes on the ease of VAT registration across cities in Romania. a. VAT registration becomes mandatory for a company if its turnover over a period of 12 consecutive months exceeds BGN 50,000 in Bulgaria or RON 220,000 in Romania. b. Statistics provided by the Bulgarian National Revenue Agency. STARTING A BUSINESS 29 their operations. In the other four cities procedure that includes registrations Dealings with the commercial registry this is necessary only if the company with the tax authorities (for corporate take relatively little time—one day for owns property or conducts its activity income tax and VAT, if applicable) and company name reservation and three on municipal property. Moreover, while the statistical office. Using standard days for incorporation, in accordance in Ruse a simple notification suffices, incorporation documents cuts the with statutory time limits uniformly in Sofia an inspector is dispatched to cost of registration by half (to HUF enforced across the country. But VAT check the company premises, after 50,000, or EUR 161) and ensures that registration takes one to three weeks which the company is registered in the process can be completed the same for companies deemed to be low risk, the municipal business registry within day—as in Debrecen, Miskolc, Pecs and depending on the workload and resourc- seven days. Szeged—or at the latest by the next es of the local office of the national tax business day.10 authority. The cost to start a business in Bulgaria ranges from 1.3% of income per capita Newly incorporated companies are also VAT registration is fastest in Bucharest, in most cities to 1.8% in Pleven. The dif- required to register for social security, Oradea, Ploiesti and Timisoara. In ference comes from the registration fee. with the national chamber of commerce Constanta it takes two weeks, and in Among the six cities surveyed, Pleven is and with local authorities for tax pur- Craiova almost three (see box 3.2). the only one where the majority of limited poses. All these postregistration proce- The differences in delays cannot be liability companies still use paper-based dures can be completed in one day and explained by application volumes, registration, which costs BGN 110 (EUR at no cost except for annual membership because VAT registration takes the 56) (see box 3.1).9 Those using the online fees of HUF 5,000 for the chamber of same amount of time in large cities like platform pay half that price: BGN 55 commerce. Bucharest and Timisoara as it does in (EUR 28). smaller ones like Oradea and Ploiesti.12 How does the process vary Constanta might be slower because it How does the process vary within Romania? does not have a regional office, where within Hungary? In Romania starting a business anywhere applications are evaluated for risk—but In Hungary, across all seven cities sur- in the country requires the same six pro- Craiova does have one and it still takes veyed, starting a business involves com- cedures and the same fees—equivalent three weeks. pleting the same six procedures, which to 1.5% of income per capita.11 Yet the takes six or seven days and costs from time it takes varies widely among the Another visit to the tax authority is 6.5% to 7.1% of income per capita. The nine cities benchmarked—from 12 days needed to obtain the so-called registry first step is to hire a lawyer to prepare and in four cities (Bucharest, Oradea, Ploiesti of controls—used to record inspections submit the company’s registration docu- and Timisoara) to 20 days in Constanta carried out by different control bod- ments. Legal fees are subject to nego- and 25 in Craiova (figure 3.4). ies in Romania. In most of the cities tiation. For simpler cases they range from HUF 160,000 (EUR 516) in Debrecen, FIGURE 3.4  The time required to start a business varies substantially among cities in Miskolc and Pecs to HUF 180,000 (EUR Bulgaria and Romania 581) in Budapest. Hungary Romania Bulgaria The next step is to open a bank account Time (days) and deposit the minimum capital. While the legislation does not explicitly require depositing at least half the minimum 7 (Gyor, Szekesfehervar) 6 (4 cities) capital at the time of incorporation, under the Civil Code company founders 12 (Oradea, Ploiesti, who have not paid in the full minimum Timisoara) 14 (Pleven, Varna) capital contribution are subject to certain restrictions on dividend distribution as well as liable for the company’s debts in the amount of the outstanding cash 23 contributions. Capital city 25 (Craiova) The Court of Registration in the city electronically registers the business, a Source: Doing Business database. 30 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA benchmarked, the registry can be pur- This is already the case in Hungary, of new limited liability companies regis- chased on the spot. The exception is where VAT registration can be declared ter electronically. Constanta, where the tax authority’s local during the company incorporation office, located at the Treasury, is open process at the Court of Registration. While electronic filing is available in only Tuesdays and Thursdays. Completing all three registrations takes Romania, the process is not yet fully just one or two days. Other countries electronic: it still requires visiting the reg- also offer examples. In Lithuania the istry in person to collect the certificate of WHAT CAN BE IMPROVED? founders of a new company can com- incorporation. The next step should be to plete VAT registration online in up to start issuing certified electronic copies, Bulgaria, Hungary and Romania already three days when registering with the as is already being done in Bulgaria and have sophisticated systems for starting Register of Legal Entities. Similarly, in Hungary. In addition, because institutions a business. But there is always room for Latvia a VAT law in force since 2013 of public interest (such as courts, banks, improvement in the policy framework enabled simultaneous filing of the com- notary offices, and state and municipal underpinning the activities of the private pany and VAT registration applications authorities) have online access to the sector, the main engine of economic at the commercial registry. The process registry database, these institutions could growth and job creation. More can be can be completed in three days. More be encouraged—or obliged by law, as in done to further ease business start-up recently, in Cyprus the Tax Department Bulgaria (see box 3.1)—to make their own and align the process with best prac- set up in 2014 integrated the Inland checks of the legal status of companies tices worldwide and in the region—as Revenue Department and the VAT that provide their registration code, with- in New Zealand, Canada and the former Services. As a result, companies can out requesting additional paperwork. Yugoslav Republic of Macedonia, where now file for their tax ID number and start-up takes one or two procedures that VAT registration simultaneously. Most countries that have success- can be completed in two days or less and fully introduced an online registration requires no paid-in minimum capital. Promote online business system first encouraged its use for a registration and eliminate few years and then, once take-up was Simplify VAT registration the need for a visit to the high, discontinued the paper-based BULGARIA, ROMANIA commercial registry to collect system. One of these is New Zealand, In Bulgaria and Romania, while corpo- the certificate of incorporation which has the top ranking on the ease rate tax registration takes place simul- ROMANIA of starting a business in Doing Business taneously with company registration at While the take-up of online business 2017. The country progressively moved the commercial registry, new companies registration remains limited in Romania, to an exclusively online system more choosing to register for VAT must the government could begin actively pro- than a decade ago. While continuing the complete a separate procedure to do moting this option now that electronic paper-based system, it offered online so. Obtaining a VAT number takes one signatures are expected to become registration at substantially lower fees to three weeks as tax officers undertake more widely used for tax purposes. An and with a guaranteed time limit (within a thorough evaluation of a company’s important tool for doing so is a public 24 hours). Once use of the online reg- founders, premises and declared busi- information campaign to emphasize the istration system reached a significant ness activity to reduce the risk of non- benefits of online registration, to educate level, New Zealand made electronic compliance and fraudulent claims (see stakeholders and to reassure them of registration mandatory and phased out box 3.2). the validity of electronic data. This effort paper-based registration. could be supported by local chambers Streamlining risk screening at the point of commerce—as has been effectively Similarly, electronic filing has become of registration would allow a reallocation done in Constanta, where 24% of all virtually universal in the United Kingdom. of the resources used to perform this new limited liability companies are Entrepreneurs can register online from activity to other compliance actions. VAT registered online, the highest take-up the comfort of their office or at the registration could take place in parallel by far among the nine Romanian cities Companies House, where computers are with corporate tax registration, with the benchmarked. The government could available to allow electronic registration. two registrations synchronized as part even consider introducing incentives to The share of new companies registered of the initial company registration with encourage use of the online platform. electronically grew sharply in the first the commercial registry. This would For example, it could offer online regis- few years, rising from around 25% in eliminate the need for secondary VAT tration at substantially lower fees than 2001—the year electronic registration registration, reducing the burden on both paper-based registration—as was done was introduced—to 95% in 2009 and the taxpayers and the tax authority. in Bulgaria, where almost three-quarters 98% in 2013.13 STARTING A BUSINESS 31 Reduce or eliminate the paid-in contributions until the full minimum a barrier to entry—especially for small minimum capital requirement capital contribution is paid in.14 Thus in companies.17 for limited liability companies effect these restrictions create a paid-in HUNGARY minimum capital requirement. Indeed, Today more than 100 economies bench- Hungary’s paid-in minimum capital to avoid being subject to the restrictions, marked by Doing Business have no paid-in requirement, at 45.5% of income per Hungarian entrepreneurs commonly pay minimum capital requirement. Among capita, remains the highest in the EU in the minimum capital in full at the EU members, four have no requirement: (figure 3.5). The Civil Code, which took time of incorporation or within a year Cyprus, Ireland, the Netherlands and effect in 2014, raised the minimum afterward. the United Kingdom. Eight others have capital requirement from HUF 0.5 mil- a requirement amounting to less than lion to HUF 3 million. While there is no Yet research shows that minimum capi- 0.1% of income per capita: Bulgaria, the explicit legal requirement to pay in at tal requirements provide little protection Czech Republic, France, Greece, Italy, least 50% of the minimum capital at the to creditors and hardly any security for Latvia, Portugal and Romania. Globally, time of registration, under the Civil Code investors during insolvency.15 Recovery 44 countries abolished or reduced their company founders who pay in less than rates are no higher in economies with paid-in minimum capital requirement 50% at that time are subject to certain paid-in minimum capital requirements over the past five years.18 restrictions relating to dividend distribu- than in those without them.16 Before tion; the company cannot pay dividends making an investment decision, credi- Make third-party involvement until the profits cover the unpaid part of tors usually assess other protections—in optional the initial cash contribution. They also the company law, insolvency law and BULGARIA, HUNGARY bear liability for the company’s debts secured transactions law. Moreover, a Start-up costs in Hungary amount to in the amount of their outstanding cash minimum capital requirement can act as around 7% of income per capita—an amount topped only by Italy, Malta, Cyprus, Poland and Croatia among EU FIGURE 3.5  How much are entrepreneurs in EU member states required to deposit as member states. About 75% of these costs minimum capital? come from the mandatory step of hiring Paid-in minimum capital (% of income per capita) a lawyer to represent the company, cre- Bulgaria 0 ate the company deed and prepare other Cyprus 0 founding documents.19 Providing public Czech Republic 0 access to the business registration system France 0 Greece 0 would allow significant cost savings for Ireland 0 small businesses. Larger companies, with Italy 0 Latvia 0 more complex structures, could continue Netherlands 0 to consult professionals. Experience else- Portugal 0 where shows that requiring businesses United Kingdom 0 Romania 0.6 to use legal services for registration is not Malta 1.3 necessary to ensure accuracy and compli- Finland 6.6 Poland 10.9 ance with the law. Portugal successfully EU average 10.9 made third-party involvement optional for Sweden 11.5 Austria 12.8 companies using standard incorporation Spain 12.9 documents provided by the registry. Denmark 13.9 Estonia 16.4 Belgium 17.0 Bulgaria requires the use of notaries to Slovakia 17.8 certify statements of consent (affida- Luxembourg 19.5 Lithuania 20.3 vits) of the company founders and their Croatia 25.5 specimen signatures.20 Why not have Germany 32.9 registry staff provide this service, as Slovenia 40.6 Hungary 45.5 in Romania? Registry staff are profes- 0 10 20 30 40 50 sionals who could be entrusted by law with the power to verify documents and Source: Doing Business database. identities—just as notaries are. A single Note: Bulgaria, the Czech Republic, France, Greece, Italy, Latvia and Portugal have a paid-in minimum capital verification should suffice for a standard requirement amounting to less than 0.1% of income per capita. The average for the EU is based on economy-level data for the 28 EU member states. company. Eliminating the requirement 32 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA to use notaries would remove one pro- Similarly, in Hungary, where companies Hungary, for example, all companies are cedure and one day from the process of are subject to a local business tax in all required to be members of the chamber starting a business in Bulgaria, as well as seven cities benchmarked, exchange of of commerce. While the chamber of the BGN 5 fee for notarization. information between the national tax commerce may provide valuable services authority and the municipalities would to its members, few countries worldwide Moreover, with the introduction of online eliminate the need for a separate regis- continue to make membership manda- registration and digital signatures, the tration with city hall. tory. More often, membership is required need to verify personal identification only for companies in highly regulated becomes obsolete. The Singapore reg- In 2012 Spain did away with the require- or strategic industries (such as bank- istrar, for example, simply assumes that ment to obtain a municipal license before ing, exporting, shipping, insurance or businesses have no interest in going starting operations. This change reduced construction) while remaining voluntary through with a fraudulent registration. the time to start a business by six days. for businesses performing general com- The registry office uses postregistration mercial activities. verification, informing people that a com- Expand online platform to pany has been created with their names include social security and labor Another example relates to the paid-in listed as founders. Thus rather than veri- registrations minimum capital. While the minimum fying every application, officials can focus HUNGARY, ROMANIA capital requirement for a newly registered their time on the few fraudulent cases After completing business registration, company is a symbolic EUR 1 in Bulgaria in which people are listed as company new companies in Hungary must register and about EUR 45 in Romania, the law founders without their consent. with social security and those in Romania still requires that entrepreneurs forming with the Labor Inspectorate. These pro- a company open a bank account, deposit Globally, almost half the economies cedures could eventually be integrated the minimum capital and attach the bank benchmarked by Doing Business—includ- into the business registration process. statement to the initial application for ing Denmark, France and Romania—have In both countries the one-stop shop at company registration. This requirement no requirement for using legal or notary the registry already consolidates several could be eliminated by allowing com- services in company registration, and steps—and the integration efforts should panies to register by just declaring their more and more are making the use of continue, with a single, consolidated minimum capital. While companies will these services optional. online interface as the final goal. continue to open bank accounts to oper- ate their business, there may be no need Review municipal requirements Other countries offer examples. Portugal’s to provide proof of one at registration. BULGARIA, HUNGARY “FastTrack” online platform allows users Alternatively, the government could form Two of the Bulgarian cities benchmarked, to select a preapproved name from the partnerships with commercial banks and Ruse and Sofia, require all newly incor- registry’s website and proceed to the link its online business registration sys- porated companies preparing to start one-stop interface to register the com- tem with their online banking platforms. operations to inform the municipality pany. The registry then automatically about the type of activity they’re engag- processes the tax, social security and Introduce a unique business ing in. This notification is done in person labor registrations and publishes the identification number by the company representative. In Sofia incorporation notice. In Slovenia, thanks HUNGARY, ROMANIA an inspector is then dispatched to check to interconnectivity between the systems Newly created companies in Hungary and the company premises—a process that of different agencies, the electronic single Romania receive a separate ID number takes seven days and is the main reason window (e-Vem) allows entrepreneurs to from each agency involved in business that Sofia has a lower ranking than any register with the business registrar, the registration. Issuing a single, unique ID other city in Bulgaria. In the other four statistical office, the tax authority and the number could facilitate information shar- cities benchmarked in Bulgaria this is health institute in a single step. ing across agencies. This is the practice in necessary only if the company owns Bulgaria, where the business registration property or conducts its activity on Review whether certain authority generates a unique business ID municipal property. Rather than imposing requirements can be eliminated number for tax, statistical, social security this requirement, municipalities could for small and medium-size and other registration purposes. obtain data on all companies registered businesses in their jurisdiction from the Registry BULGARIA, HUNGARY, ROMANIA Hungary and Romania could follow Agency and, using a risk-based system Some requirements may warrant review suit, introducing a single business ID to classify business activities, decide to see whether they are necessary for number that businesses would use as whether an inspection is needed. small and medium-size businesses. In a unique identifier for all interactions STARTING A BUSINESS 33 with government agencies. This would (U.S. Agency for International Development, NOTES Washington, DC, 2007). Other relevant facilitate compliance checks throughout studies include John Armour, “Legal Capital: the life of a company as well as free com- 1. Marco Becht, Colin Mayer and Hannes F. An Outdated Concept?” European Business panies from the administrative burden of Organization Law Review 7, no. 1 (2006): 5–27; Wagner, “Where Do Firms Incorporate? Friedrich Kübler, “A Comparative Approach submitting information multiple times to Deregulation and the Cost of Entry,” Journal to Capital Maintenance: Germany,” European of Corporate Finance 14, no. 3 (2008): 241–56. different agencies. Norway has taken this The authors find that incorporations of Business Law Review 15, no. 5 (2004): 1031–35; a step further: since 2005 it has imposed Joelle Simon, “A Comparative Approach continental European firms in the United to Capital Maintenance: France,” European a legal obligation on all public registers Kingdom increased following the rulings of the Business Law Review 15, no. 5 (2004): European Court of Justice in 1997–2003 that and public authorities to use the data allowed firms operating in the EU to register in 1037–44; Peter O. Mülbert and Max Birke, registered in the Central Coordinating “Legal Capital—Is There a Case against the any EU country, regardless of their country of European Legal Capital Rules?” European Register for Legal Entities rather than operation or their directors’ nationality. Business Organization Law Review 3, no. 4 2. For a limited liability company, registration requiring businesses to resubmit these fees are RON 533.50 (EUR 118) and the paid- (2002): 695–732. data.21 16. World Bank, Doing Business 2012: Doing in minimum capital requirement is RON 200 Business in a More Transparent World (EUR 44). (Washington, DC: World Bank, 2011). 3. Leora Klapper, Anat Lewin and Juan Manuel One common approach to implementing Quesada Delgado, “The Impact of the 17. Andre Van Stel, David Storey and Roy this reform is to assign a unique ID num- Thurik, “The Effect of Business Regulations Business Environment on the Business on Nascent and Young Business ber at the time of business registration Creation Process,” Policy Research Working Entrepreneurship,” Small Business Economics Paper 4937 (World Bank, Washington, DC, that is then reused by other authorities, 2009). 28, no. 2 (2007): 171–86. such as the tax authority or social secu- 18. Doing Business database. 4. Lee Branstetter, Francisco Lima, Lowell 19. The cost can range from HUF 100,000 to HUF rity agency. Another approach, used in J. Taylor and Ana Venâncio, “Do Entry 250,000 (EUR 323 to EUR 807). Regulations Deter Entrepreneurship and Job Norway, is to assign entrepreneurs a Creation? Evidence from Recent Reforms 20. Article 141 of the Bulgarian Commercial unique ID number before they proceed Act requires the statements of consent and in Portugal,” Economic Journal 124, no. 577 signature specimens of company managers to to register their business. The ID number (2014): 805–32. be certified by notary. 5. Francesco Bripi, “The Role of Regulation on and the identifying information are then Entry: Evidence from the Italian Provinces,” 21. World Bank Group, Investment Climate made available to all agencies involved Department, Business Registration Reform Case Working Paper 932 (Bank of Italy, Rome, Study: Norway (Washington, DC: World Bank in the registration process. Regardless of 2013). Group, 2011). 6. Antonio Ciccone and Elias Papaioannou, the approach, the reform does not neces- “Red Tape and Delayed Entry,” Journal of the 22. “Guide for Doing Business,” Belgian Federal sarily require introducing an entirely new Government, 2017, http:/ /www.business European Economic Association 5, nos. 2–3 .belgium.be/en. system of ID numbers. For example, the (2007): 444–58. 7. Norman Loayza, Ana Maria Oviedo and Luis Belgian government simply changed the Servén, “Regulation and Macroeconomic old VAT ID number into an enterprise Performance,” Policy Research Working Paper number.22 3469 (World Bank, Washington, DC, 2005); and Levon Barseghyan, “Entry Costs and Cross-Country Differences in Productivity and Introducing a common ID number for Output,” Journal of Economic Growth 13, no. 2 businesses requires a common database, (2008): 145–67. 8. These three are Belgium, Finland and Hungary. interoperable systems and mapping, and 9. Statistics provided by the Commercial the conversion of existing identifiers. Register at the Registry Agency, Bulgaria. The process is relatively complex and 10. This cost does not reflect the elimination in March 2017 of certain fees and charges (such cost-intensive. Nonetheless, a growing as stamp duty and publication fees) related number of countries have introduced to the registration of legal entities, including common ID numbers to increase effi- limited liability companies. 11. This cost does not reflect the recent ciency in the public sector and reduce the elimination of registration fees of RON 400 administrative burden on businesses. by Law 1/2017, in force since February 1, 2017, which eliminated more than 100 fees and duties. 12. Statistics provided by the National Agency for Fiscal Administration, Romania. 13. U.K. Companies House, Companies House Annual Report & Accounts 2012/13 (London: The Stationery Office, 2013) and Companies Register Activities 2012–2013 (London: Companies House, 2013). 14. Section 3:162 of the Hungarian Civil Law Codex 2013. 15. Geoffrey Elkind, “Minimum Capital Requirements: A Comparative Analysis” Dealing with Construction Permits MAIN FINDINGS ƒƒ Among the three countries, completing the construction permitting process for a simple warehouse is easiest in Hungary, where it takes 18 procedures and 164 days and costs 0.5% of the warehouse value on average. But the process is fastest in Bulgaria, where it takes 141 days on average. ƒƒ Construction permitting is considerably more burdensome in all three countries than in most other member states of the European Union. This is largely because of the number of approvals builders are required to obtain before applying for a building permit. ƒƒ In Bulgaria construction permitting is easiest and fastest in Sofia, where it takes 97 days. In Hungary the process is easiest and least time-consuming in Pecs, where it requires 17 procedures and about five months. And in Romania the process is easiest in Craiova, though it is neither fastest nor least costly there. ƒƒ Bulgaria, Hungary and Romania all perform well on the building quality control index, scoring 13 of 15 possible points and surpassing the EU average of 11.4 points. ƒƒ Among the main constraints to greater efficiency in the permitting process, particularly in Bulgaria and Romania, are lack of transparency around the requirements, lack of streamlined processes for preapprovals and weak electronic platforms. DEALING WITH CONSTRUCTION PERMITS 35 I n 2015 almost all member states of Among the three countries, dealing the European Union saw an increase HOW DOES CONSTRUCTION with construction permits is easiest in in the number of building permits PERMITTING WORK IN Hungary, where it takes 18 procedures issued. In Hungary, for example, 29% BULGARIA, HUNGARY AND and 164 days and costs only 0.5% of the more building permits were issued than ROMANIA? warehouse value on average (table 4.1). in the previous year.1 In 2009 the coun- But the process is fastest in Bulgaria, try had adopted building regulations Bulgaria, Hungary and Romania all have where it takes 141 days on average. In that tightened the legal time limit for a construction permitting process that is Romania it takes 115 days more on aver- issuing building permits by 15 days. It regulated predominantly at the national age than in Bulgaria, and in both Bulgaria was not alone in such efforts: over the level but implemented by local agencies and Romania it costs more than six times past decade countries across the EU (figure 4.1). And in all three countries as much as in Hungary. moved toward simpler and faster build- licensed private experts or companies are ing permitting processes.2 This makes heavily involved at both the design and How do results compare with sense, since the construction and con- construction supervision stage as well as other EU member states and struction products sector represents in updating the geodetic measurements globally? about 10% of the overall GDP of the after construction. But while Bulgaria Construction permitting is considerably EU.3 And studies have shown that long and Romania have an inspection system more burdensome in all three countries delays in receiving permits can lead organized around specified phases of con- than in most other EU member states— to higher transaction costs and fewer struction, Hungary relies on a more ran- with the 18 procedures in Hungary, 19 in construction projects.4 dom system of unscheduled inspections. Bulgaria and 26 in Romania all exceeding WHAT DOES DEALING WITH CONSTRUCTION PERMITS MEASURE? To measure the ease of dealing with construction permits, Doing Business records the procedures, time and cost required for a small or medium-size business to obtain the approvals needed to build a commercial warehouse and connect it to water and sewerage. This includes all inspections and certificates needed before, during and after construction of the warehouse. To make the data comparable across locations, it is assumed that the warehouse is in the periurban area of the analyzed busi- ness city, that it is not in a special economic or industrial zone and that it will be used for the general storage of nonhazardous materials such as books. In addition, Doing Business compiles a building quality control index that measures the underlying quality of construction regulations and controls. The index accounts for one-fourth of the distance to frontier score for dealing with construction permits (see figure). Dealing with construction permits: measuring the efficiency and quality of building regulation Rankings are based on distance to frontier scores for four indicators Quality of Measures the accessibility of building regulations and the clarity building regulations of requirements for obtaining a building permit Days to comply with formalities to build a Quality control Assesses whether licensed or technical experts are involved in warehouse approving building plans before construction 25% Building quality Quality control Records the types of inspections legally mandated during 25% control during construction construction and whether they are carried out in practice Time index 25% 25% Cost Procedures Quality control Records final inspections legally mandated after construction and after construction whether they are carried out in practice Cost to comply Steps to comply with formalities, with formalities; Records which parties are held legally liable for structural defects Liability and and which are required to obtain insurance policies to cover as % of completed when final document is insurance regimes damages caused by defects warehouse value received Professional Assesses the qualification requirements for the professionals who certifications approve building plans and for those who supervise construction 36 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 4.1  Dealing with construction permits requires more procedures before construction in Romania but more after construction in Hungary BULGARIA HUNGARY ROMANIA Before construction Before construction Before construction Obtain current cadastral extract from cadastre Obtain site map and site ownership certificate Obtain urban planning certificate from City Hall from land registry Obtain project visa from municipality Obtain geotechnical report Obtain project clearance from Health Department Sign preliminary contract with water company Obtain utility statement from water company Obtain project clearance from Environment Agency Obtain decision from Regional Inspectorate Obtain utility permission document from Obtain project clearance from Inspectorate of of Environment and Water water company Emergency Situations Obtain assessment on energy Obtain authorization of the fire Register project with Order of Architects efficiency compliance protection system Sign contract with licensed supervision Obtain building permit from Obtain updated land registry except from cadastre company and obtain evaluation of project for Mayor’s Office conformity with construction requirements Obtain final building permit Receive on-site inspection from Obtain building permit from municipality Mayor’s Office Obtain approval for opening a Set up e-construction log Notify City Hall of commencement of construction construction site Notify Construction Inspectorate of commencement of construction Notify Labor Inspectorate of commencement of construction During construction During construction During construction Obtain approval on the carcass construction Receive unscheduled inspection Receive foundations work inspection from municipality Receive frame inspection After construction After construction After construction Obtain geodetic measurements Obtain water and sewerage connection Notify City Hall of completion of construction Map building in the cadastral map and obtain Close e-construction log Notify Construction Inspectorate of completion registration certificate from cadastre of construction Obtain energy efficiency certificate Obtain approval on the cleanliness of water Receive final inspection from acceptance commission Submit final report to municipality Submit new geodetic map to land registry Obtain final assessment of construction from acceptance commission Register technical passport with municipality Receive final inspection from Obtain water and sewerage connection Fire Protection Unit File copy of registered technical passport Receive final inspection from Register building with cadastre with cadastre Public Health Unit Obtain certificate of approval of use Receive final inspection from Mayor’s Office from municipality Obtain occupancy permit and update site ownership certificate Local authority National authority Private party Source: Doing Business database. Note: The procedures shown for each country are common to all cities benchmarked in that country. Additional requirements apply in specific cities. Procedures administered by national agencies are in some cases completed (or performed) at regional branches of these national agencies. the EU average of only 13 (figure 4.2). Romania six preapprovals are required.5 Yet construction permitting takes much This largely reflects approvals that Indeed, Romania and Bulgaria require less time in Bulgaria (at 141 days), and builders must obtain before applying for more procedures than any other EU slightly less time in Hungary (164), a building permit. In both Bulgaria and member state except the Czech Republic. than the EU average (169). In Romania, DEALING WITH CONSTRUCTION PERMITS 37 TABLE 4.1  Dealing with construction permits in Bulgaria, Hungary and Romania—where is it easier? Distance to Cost Building quality frontier score Procedures Time (% of warehouse control index City (Country) Rank (0–100) (number) (days) value) (0–15) Pecs (Hungary) 1 75.58 17 144.5 0.4 13 Szeged (Hungary) 2 74.38 18 147.5 0.4 13 Szekesfehervar (Hungary) 3 73.70 18 155.5 0.5 13 Miskolc (Hungary) 4 73.47 18 158.5 0.5 13 Gyor (Hungary) 5 73.35 18 161.5 0.4 13 Sofia (Bulgaria) 6 72.75 18 97 4.6 13 Debrecen (Hungary) 7 72.71 18 171.5 0.4 13 Pleven (Bulgaria) 8 71.92 18 152 2.1 13 Ruse (Bulgaria) 9 71.34 18 165 1.9 13 Varna (Bulgaria) 10 70.53 19 135 3.4 13 Burgas (Bulgaria) 11 69.23 19 133 4.6 13 Plovdiv (Bulgaria) 12 68.30 20 162 2.9 13 Budapest (Hungary) 13 67.89 20 205.5 0.7 13 Craiova (Romania) 14 61.31 25 206 1.9 13 Bucharest (Romania) 15 58.09 24 260 2.2 13 Oradea (Romania) 16 57.84 25 156 7.6 13 Brasov (Romania) 17 56.28 26 247 2.8 13 Iasi (Romania) 18 56.01 26 266 1.9 13 Ploiesti (Romania) 19 54.40 27 268 2.3 13 Cluj-Napoca (Romania) 20 54.32 27 275 1.9 13 Constanta (Romania) 21 49.26 25 307 5.7 13 Timisoara (Romania) 22 48.92 27 315 3.9 13 Source: Doing Business database. Note: Rankings are based on the average distance to frontier score for the procedures, time and cost associated with dealing with construction permits as well as for the building quality control index. The distance to frontier score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. however, it takes much more time (256 construction regulations and controls in (table 4.2). They have local authorities days) than in any other EU member state six main areas (for a possible 15 points): staffed with licensed architects and engi- except the Slovak Republic (286) and quality of building regulations (2 points); neers who verify that building plans are in Cyprus (507). In Romania obtaining the quality control before (1), during (3) and compliance with the building regulations; urban planning certificate or the building after construction (3); liability and insur- require a supervising engineer (and, permit alone can take up to a month. ance regimes (2); and professional certi- in Bulgaria, a supervision company) to fications (4). All three countries score 13 be legally responsible for supervising Dealing with construction permits is of the 15 possible points, surpassing the construction; and have building control much less costly on average in Hungary EU average (11.4) as well as the global authorities conduct either random or (at 0.5% of the warehouse value) than average (9.4)—largely because of the phased inspections throughout the con- across the EU on average (2.0%). But it transparency of requirements and the struction process. All three have regula- is much more costly in Bulgaria (3.2%) quality control at all stages. There is no tions defining risk categories for buildings, and Romania (3.4%), largely because of subnational variation in the three coun- though these regulations have no impact high preapproval and building permit fees tries, as all areas assessed are covered by on construction supervision (inspec- (figure 4.3). national regulation. tions are the same for all types of build- ings, regardless of risk category). They Bulgaria, Hungary and Romania all per- All three countries make building regula- legally mandate final inspections after form well on the building quality control tions available online and clearly specify construction that also occur in practice. index, which assesses the quality of the requirements for a building permit They hold both the architect or engineer 38 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 4.2  Dealing with construction permits requires more procedures in Bulgaria, Hungary and Romania than in most other EU member states EFFICIENCY OF CONSTRUCTION PERMITTING Procedures Time Cost (number) (days) (% of warehouse value) 0 Slovak Republic 0 (EU and global best)** 0 Korea, Rep. (global best) Debrecen, Gyor, Pecs, Szeged 30 Hungary average 0.5 Miskolc, Szekesfehervar 6 Budapest Denmark (EU best) 60 1.0 Denmark, Sweden (EU and global best)* 1.5 100 Sofia 9 Cluj-Napoca, Craiova, Iasi, Ruse 130 EU average 2.0 Pleven Burgas, Varna Bucharest, Ploiesti Bulgaria 2.5 Bulgaria average 140 Pecs Brasov 12 average Szeged 3.0 Plovdiv EU average 150 Pleven Szekesfehervar, Oradea, Miskolc 3.5 Varna 160 Gyor, Plovdiv Romania 15 Hungary average 4.0 Timisoara Ruse average EU average 170 Debrecen Pecs 4.5 Burgas, Sofia 200 Budapest, Craiova Hungary average 18 5 Hungarian cities, Pleven, Ruse, Sofia 5.0 Bulgaria average Burgas, Varna 250 Brasov Romania 5.5 Budapest, Plovdiv average 260 Bucharest Constanta 21 6.0 Iasi 270 Ploiesti 6.5 Cluj-Napoca 24 Bucharest 280 7.0 Constanta, Craiova, Oradea Constanta 310 7.5 Romania average Brasov, Iasi Timisoara Oradea 27 Cluj-Napoca, Ploiesti, Timisoara 320 8.0 BUILDING QUALITY CONTROL Index (0–15) Luxembourg (EU and global best), 15 New Zealand (global best) 14 All 22 cities in Bulgaria, Hungary 13 and Romania 12 EU average 11 10 9 8 7 6 5 4 3 2 Bulgarian city 1 Hungarian city 0 Romanian city Source: Doing Business database. Note: The averages for Bulgaria, Hungary and Romania are based on data for the cities benchmarked in each country. The averages for the EU are based on economy-level data for the 28 EU member states. * Georgia and the Marshall Islands also have seven procedures. ** Dominica, Mongolia, St. Vincent and the Grenadines, Thailand, and Trinidad and Tobago also have a cost of 0.1% of the warehouse value. DEALING WITH CONSTRUCTION PERMITS 39 FIGURE 4.3  Builders face high fees for preconstruction approvals and building permits the index. In addition to the architect in Bulgaria and Romania or engineer and the construction com- pany, Bulgaria and Romania also hold the professional in charge of supervising Hungary 0.10.1 0.1 0.2 0.5 construction liable. But while Bulgaria requires these parties to obtain an insurance policy to cover possible Bulgaria 1.8 0.8 0.5 0.1 3.2 defects, Hungary and Romania do not. Qualification requirements also differ. All three countries require the supervis- Romania 0.8 1.0 0.1 1.5 3.4 ing engineer to have a university degree and be registered with the professional association or pass a certification exam. 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 But while Hungary and Romania also Average cost to deal with construction permits (% of warehouse value) require the supervising engineer to have a Preconstruction documents and approvals required for building permit minimum number of years of experience, Building permit Bulgaria does not. Final approvals and registration of building Water and sewerage connections How does the process vary within Bulgaria? Source: Doing Business database. An entrepreneur dealing with construc- tion permits in Bulgaria can expect to in charge of drawing the plans and the professionals responsible for permitting complete anywhere from 18 procedures construction company legally liable for approvals. in Pleven, Ruse or Sofia to 20 in Plovdiv. structural defects discovered in a building The variation stems in part from the after it has been occupied. And they have There are also differences among the number of requirements for obtaining a strict qualification requirements for the three countries in aspects measured by water and sewerage connection.6 In all six TABLE 4.2  All three countries have strong building quality control mechanisms     Bulgaria Hungary Romania Building quality control index (0–15) 13 13 13 Quality of building Are building regulations easily accessible? 1 1 1 regulations (0–2) Are the requirements for obtaining a building permit clearly specified? 1 1 1 Quality control Is a licensed architect or licensed engineer part of the committee or team before construction 1 1 1 that reviews and approves building permit applications? (0–1) Quality control Are inspections mandated by law during the construction process? 1 1 1 during construction (0–3) Are inspections during construction implemented in practice? 1 1 1 Quality control after Is a final inspection mandated by law? 2 2 2 construction (0–3) Is a final inspection implemented in practice? 1 1 1 Is any party involved in the construction process held legally liable for latent 1 1 1 Liability and defects once the building is in use? insurance regimes Is any party involved in the construction process legally required to obtain a (0–2) latent defect liability—or decennial (10-year) liability—insurance policy to 1 0 0 cover possible structural flaws or problems in the building once it is in use? Are there qualification requirements for the professional responsible for Professional verifying that the architectural plans or drawings are in compliance with the 2 2 2 certifications building regulations? (0–4) Are there qualification requirements for the professional who conducts the 1 2 2 technical inspections during construction? Source: Doing Business database. Maximum points not obtained. 40 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Bulgarian cities entrepreneurs must first FIGURE 4.4  Dealing with construction permits takes almost 70 days less in Sofia than sign a preliminary contract with the water in Ruse company allowing them to connect the warehouse to the utility’s network. But Sofia 25 35 30 7 97 in Plovdiv and Ruse, for example, entre- preneurs must also invest in construct- Burgas 40 35 24 20 14 133 ing the water network, which is done through another contract—a “tripartite contract” signed by the water company, Varna 36 36 43 10 10 135 the municipality and the construction company. Concluding this contract takes Pleven 47 35 52 10 8 152 a week in Plovdiv but a month in Ruse. Another source of variation is the approv- Plovdiv 44 30 48 30 10 162 al from the Regional Health Inspectorate. In Plovdiv and Varna entrepreneurs Ruse 55 21 33 30 26 165 must obtain this approval on their own. But in the other four cities the Regional 0 30 60 90 120 150 180 Inspectorate of Environment and Water Time to deal with construction permits (days) notifies the Regional Health Inspectorate Obtain all documents and approvals required for building permit that it has issued the environmental deci- Obtain building permit sion—and that agency then requires a Undergo final approvals and register building personal visit only if there are objections Connect to water and sewerage to the project, saving the entrepreneur a Other step if there are none. Inspection practic- es also vary. The Law on Spatial Planning Source: Doing Business database. permits municipalities to inspect a building upon completion but does not points more than the average for the six and 205.5 days. Because of a heavy require it. Ruse is the only city where cities—and almost 3 percentage points workload, the Chief Architect Unit at the the municipality is unlikely to conduct a more than in Ruse, with the lowest cost. Mayor’s Office takes a month to issue the final inspection—though in all six cities urban planning approval—compared with the supervising engineer must submit a How does the process vary two weeks on average in the other cities. final report to the municipality once the within Hungary? The higher volume of applications in project is completed. Among the seven Hungarian cities, con- larger cities makes it more imperative to struction permitting is easiest and fastest improve workflows, enhance interagency Among the six Bulgarian cities, construc- in Pecs, the only one requiring as few as coordination and ensure good project tion permitting is easiest and fastest in 17 procedures, which can be completed management. Even the higher staffing Sofia, taking only 97 days—as compared in 144.5 days (figure 4.5). In Pecs the levels in the larger cities are often not with 165 in Ruse, with the slowest building permit is issued in 30 days, and enough to offset the workload.9 Perhaps process (figure 4.4). The reason is that the occupancy permit (including the unsurprisingly, if not for the expedited Sofia offers a fast-track option for some update of the site ownership certificate) services, Sofia would have the slowest services. So if entrepreneurs are willing to in 35 days—while each of these steps permitting process in Bulgaria. Indeed, pay extra fees, they can obtain the project take about 45 days on average in the public officials in the capital cities of all visa in 3 days rather than the usual 14; the other six cities. This is in part because of three countries cited lack of adequate approval for opening a construction site better staffing in the Technical Unit of the staffing as among their main challenges.10 in 2 days rather than 7; and the approval Mayor’s Office in Pecs. Pecs is also the of the “carcass” construction in 4 days only Hungarian city requiring no urban In Budapest obtaining water and sewer- rather than 14.7 But the fast-track fees planning approval for a warehouse like age connections (including obtaining the also make Sofia’s permitting process the the one in the Doing Business case study. utility permission documents) requires most costly, at 4.6% of the warehouse interacting with two separate agencies— value, suggesting that offering fast-track Budapest has the most complex and Budapest Waterworks and Budapest services is not necessarily always opti- slowest permitting process among the Sewage Works—and both processes take mal.8 The cost in Sofia is 1.4 percentage Hungarian cities, taking 20 procedures around 40 days (though the documents DEALING WITH CONSTRUCTION PERMITS 41 FIGURE 4.5  The construction permitting process can be completed two months faster the city’s hilly topography). And Bucharest, in Pecs than in Budapest Craiova and Ploiesti are the only ones not requiring a clearance from the Road Police Pecs 45 30 52 15 2.5 144.5 or Circulation Committee.12 Szeged 37 38 61 9 2.5 147.5 Another reason is differences in the process after construction. This process Szekesfehervar 42 45 56 10 2.5 155.5 is more streamlined in Bucharest and Oradea, where the final assessment of Miskolc 40 45 57 14 2.5 158.5 the building is issued on the spot, as soon as the final inspection is completed. In Gyor 40 45 64 10 2.5 161.5 the other cities the final assessment is issued 18 days afterward on average. Debrecen 49 45 60 15 2.5 171.5 The construction permitting process is Budapest 62 45 65 31 2.5 205.5 slowest in Timisoara, where it takes 315 days (the most among all 22 cities bench- 0 30 60 90 120 150 180 210 marked across the three countries), largely Time to deal with construction permits (days) because obtaining the water and sewerage Obtain all documents and approvals required for building permit connection takes up to three months. The Obtain building permit process is fastest in Oradea, where it takes Undergo final approvals and register building only 156 days (figure 4.6). In Oradea the Connect to water and sewerage City Hall issues building permits within Other 12 days on average, while in the other Source: Doing Business database. Romanian cities this takes 30–45 days. can be obtained simultaneously). In all FIGURE 4.6  Dealing with construction permits takes half as much time in Oradea as the other cities a single utility company in Timisoara can take care of both connections. On the other hand, Budapest is one of only two Oradea 67 12 46 25 6 156 cities (the other being Szekesfehervar) where the water company does not Craiova 66 30 38 60 12 206 charge a fee for the utility statement that must be obtained before connect- Brasov 105 40 37 60 5 247 ing. But Budapest nevertheless has the Bucharest 73 30 77 75 5 260 highest fees for new connections: at HUF 724,759 (EUR 2,339), they are more than Iasi 123 30 33 75 5 266 three times those in Debrecen, with the lowest fees at HUF 205,600 (EUR 664).11 Ploiesti 126 30 47 60 5 268 How does the process vary Cluj-Napoca 125 30 40 75 5 275 within Romania? Constanta 113 45 69 75 5 307 Among the nine Romanian cities, deal- ing with construction permits takes the Timisoara 124 30 66 90 5 315 fewest procedures in Bucharest (24) and the most in Cluj-Napoca, Ploiesti and 0 30 60 90 120 150 180 210 240 270 300 330 Timisoara (27). Differences across cities Time to deal with construction permits (days) in the project clearances required explain Obtain all documents and approvals required for building permit some of the variation. For example, Obtain building permit Undergo final approvals and register building Timisoara is the only one requiring a solid Connect to water and sewerage waste disposal clearance, and Iasi the only Other one requiring a project clearance from the City Hall’s Slope Committee (because of Source: Doing Business database. 42 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA In Craiova, with the second-fastest for the water connection and RON 450 in construction permitting should provide process in Romania as well as the easi- (EUR 99) for the sewerage connection. In information on its own process and est one, project clearances are handled Constanta, with the second most costly requirements, the responsibility for pro- more efficiently. The City Hall convenes permitting process among the 22 cities, viding information on the overall process representatives of all utility companies the cost is 5.7% of the warehouse value. should reside with the permit-issuing when processing the request for the authority.15 Exhaustive guidelines should urban planning certificate and then cover key steps, the agencies involved, decides which approvals are required WHAT CAN BE IMPROVED? documentation requirements, and the for the building permit, noting them in certificates, permits and approvals the certificate. In addition, the City Hall This chapter’s review of the construction required along with corresponding time will obtain all the clearances on behalf of permitting process in Bulgaria, Hungary frames and fees. the applicant for an extra processing fee and Romania points to several areas of (RON 14, or EUR 3.10, per clearance). possible improvement. Some recom- Many economies have improved trans- While this does not speed up the clear- mendations apply to all three countries, parency in recent years with positive ance process, it does save the applicant others to one or two of them. results. Along with other good practices from having to go separately to each in Vienna, for example, authorities put all agency to obtain the clearances.13 This Consolidate requirements and planning information on a web-based GIS means fewer procedures in Craiova regulations platform (box 4.1). (25) than in Cluj-Napoca, Ploiesti and BULGARIA, HUNGARY, ROMANIA Timisoara (27), for example. In all three countries developers have to Fully adopt a risk-based consult numerous laws, regulations and approach to environmental While Oradea has the fastest process in websites to identify the documentation approvals Romania, it also has the most costly one required for a building permit application BULGARIA, HUNGARY, ROMANIA among all 22 cities benchmarked, at 7.6% as well as the construction standards Bulgaria’s Law on Environment Protection of the warehouse value. This is largely they must follow.14 Making all such infor- (appendixes 1 and 2) clearly defines because of the extremely high cost to mation easily available would reduce the the types of projects that require an connect to water and sewerage, with time needed for document preparation environmental impact assessment. A fees per meter of RON 225 (EUR 50) and review. While each agency involved simple commercial building like the Doing BOX 4.1 High standards for transparency and construction supervision in Austria In Vienna and Lower Austria information and communication technology solutions have increased the transparency of land planning information. Authorities have put official land plans into an interactive GIS-based format and made them publicly avail- able online. The online system integrates information on building specifications as well as details on the location, capacity and availability of utility connections. This enables builders and developers to find online all the information they need for building permit applications. It also eliminates the need for a number of preapprovals. Austria has also rationalized its building inspection system while setting high standards for quality control. Legislation adopted in 1990 introduced a risk-based approach to inspections, replacing a regulatory system that required a building permit for almost any work. Different classes of buildings and construction work were introduced, with administrative procedures and safeguards adapted to each class according to its level of risk: class 1 projects require only a construction notice, class 2 projects require a simplified building permit procedure, and class 3 projects undergo a formal building permit procedure with full third- party review of all critical elements of construction. The Austrian building quality control system gives substantial responsibility to private (and highly qualified) professionals and, for more complex projects, requires that these professionals be third-party actors. Buildings in Austria typically must be de- signed by a professional designer or architect and constructed by a master builder. For large-scale or more complex projects, project developers are required to appoint a third-party Prüfingenieur—a highly qualified professional civil engineer who is legally certified and registered—to inspect important elements of construction during the project. To ensure high professional standards and compliance, Austria has introduced strict professional qualification requirements for the regulated professional groups involved in the construction industry. Source: World Bank Group, Investment Climate Department, Good Practices for Construction Regulation and Enforcement Reform: Guidelines for Reformers (Washington, DC: World Bank Group, 2013). DEALING WITH CONSTRUCTION PERMITS 43 Business case study warehouse does not process requires submitting full tech- cost of the building but on the cost of require one. But like all building projects, nical documentation (online and in providing the services. Authorities in regardless of size or complexity, it would person)—including plans, details on size Bulgaria and Romania could therefore still have to get official confirmation of and location, and the urban planning consider charging lower fees for sim- this from the Regional Inspectorate of certificate and other clearances—as well pler buildings that pose little risk to Environment and Water. One thing the as paying another fee.16 public health and safety. In this way agency checks is the location of the proj- larger projects with more substantial ect, to ensure that it is not in a protected Similarly, in Hungary, while the Building building fees could subsidize the fees of area. Since the law already classifies Department obtains the environmental smaller ones. Hungary charges a fixed buildings by risk, Bulgaria could go one clearance on behalf of the applicant, all fee of HUF 100,000 (EUR 323) for the step further by eliminating the environ- projects must still undergo the process. building permit for buildings over 250 mental approval for simpler buildings. square meters, an administrative fee In all three countries simpler projects of HUF 5,000 (EUR 16) and a fixed To eliminate location checks, Bulgaria clearly exempted by law should not need fee for each review required. For the could develop more accurate GIS-based to undergo an environmental approval case study warehouse most Hungarian maps that municipalities could consult process. If all projects must obtain an cities would require a review of the when reviewing a building permit appli- environmental decision, defining risk- documentation by the Public Health cation. In the absence of GIS-based based categories in the legislation, as Unit (HUF 8,700, or EUR 28) and by maps, the Regional Inspectorate of all three countries have done, becomes the Environment and Conservation Unit Environment and Water is using paper- ineffective and redundant. (HUF 14,000, or EUR 45). based maps and a set of objective criteria to determine whether projects require Many EU member states have adopted In economies that have adopted good an environmental impact assessment. a risk-based environmental approval practices in this area, building permit These criteria could be shared with the process. In Belgium, for example, no fees are generally set so as to recover permitting authorities, which could refer environmental impact report is required the cost of providing the services rather applicants to the Regional Inspectorate for a warehouse like the one in the Doing than to fulfill a tax purpose. For example, in cases where the land plot is near or Business case study. And in Denmark New Zealand set the fees at a level that adjacent to a protected area. applicants submit an assessment of the will cover the costs associated with the project’s overall impact on the environ- review of plans and any inspections, In Romania the process is more ment (including a situational plan and along with overhead costs. complicated, involving three phases. sectional drawings) as part of the docu- Government Decision 445/2009 mentation for the building permit. But Streamline the process for (annexes 1 and 2) lists the types of no separate environmental approval is preconstruction approvals projects subject to a full environmen- required. BULGARIA, ROMANIA tal impact assessment. But every One of the main bottlenecks in construc- project must still be submitted to the Review the cost structure for tion permitting in Bulgaria and Romania Environment Agency for a decision on building permits is the large number of approvals an entre- whether it should move on to the second BULGARIA, ROMANIA preneur must obtain before applying for a phase, for a project clearance. If it does, Where dealing with construction permits building permit. Each approval requires a the agency assembles a technical analy- is relatively costly, as it is in Bulgaria and separate visit to the responsible agency. sis committee to decide whether the Romania, this can raise concerns about In the medium to long term Bulgaria and project will undergo a full environmental informality: overly high costs of compli- Romania could revisit the entire preap- impact assessment (third phase). The ance with building regulations may proval process—and consider adopting law is vague, providing relatively broad discourage businesses from following a more risk-based system that exempts descriptions of projects that would formal procedures. some types of buildings from some require a simple evaluation (first phase). preapproval requirements, as is done in So even a simple building like the Doing In Bulgaria building permit fees, though Austria. Adopting risk-based approvals Business case study warehouse would established by municipalities, depend allows building authorities to tailor the likely undergo the project clearance in all cases on the size of the building. scope and intensity of controls to the process, with a committee deciding In Romania fees are set at 1% of the type of building. whether it should undergo a full impact value of the construction. But the fees assessment. This imposes a burden on for providing services in any country In the short to medium term, however, the entrepreneur, because the clearance should be based not on the size or establishing a single focal point—a sort of 44 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA one-stop shop that could coordinate with to review the application online, as dis- In 2013 Hungary also introduced an all the agencies and issue a single pre- cussed in further detail in the following e-construction log system that improved construction clearance—would increase section. internal administrative efficiency. Every efficiency. The applicant could present construction project must be registered all documents required for the preap- Expand electronic platforms through this system by the construction provals in one visit to the municipality or throughout the construction company, which is required to update city hall, which could then obtain all the permitting process the log daily with the type of work com- preapprovals on the applicant’s behalf BULGARIA, ROMANIA pleted at the site, the number of people by forwarding each application to the Electronic platforms can help cut delays who worked and the latest certificates relevant agency. However, this would at all phases of construction. They allow on waste removal. Once construction is require more staffing and possibly higher entrepreneurs to apply for building completed, the company closes the log fees to cover the additional staffing costs. permits and submit plans online—which and uploads the relevant documents.18 Even more efficient would be to have not only speeds up the process but each agency send a representative to sit also increases transparency, reduces Bulgaria and Romania could start with at the permit-issuing agency and review opportunities for corruption and enables an electronic platform providing a applications on-site (even if done on a applicants to monitor the status of their basic computerized workflow across part-time basis). applications. They also allow greater key agencies—with the possibility of management oversight capabilities for gradually integrating more services in Timisoara offers a good example. In other the construction regulator, by enabling the permitting process. Some cities have Romanian cities an engineer develops the managers to monitor workflows in real already begun leveraging information and situation and location plans required for time and ensure that service delivery communication technology solutions an urban planning certificate, which are standards are met. to improve service delivery. In Romania, then endorsed by the cadastre office. In Oradea’s City Hall introduced an SMS Timisoara the City Hall issues the plans. In Bulgaria and Romania applications for alert system in 2016 that notifies an The City Hall has records of the entire building permits cannot be submitted applicant whenever a document is signed city mapped through the GIS system, online. Applications for other types of or stamped. Since 2015 applicants have enabling it to obtain the plans faster and approvals can sometimes be submitted also been able to track the status of their less expensively, without hiring additional online, but still have to be presented in application online. experts. The City Hall also combines six person as well. In Romania, for example, clearances required from network utilities applicants must submit the documenta- Further efforts are under way in Romania. (such as the water and electricity com- tion for an environmental clearance both In December 2016 Romania adopted panies) into one utility clearance, issued electronically and in person. amendments to the Construction through its single window. This one-stop Law (through Emergency Ordinance shop could be expanded to include Both countries could look to the 100/2016) requiring authorities to representatives from other agencies example of Hungary, which launched the ensure that all documentation for the that have to provide clearances, such as Building Regulatory Support Electronic urban planning certificate, the building the Environment Agency and the Health Documentation System (ÉTDR) in 2013. permit and all clearances can be submit- Department. All applicants for a building permit are ted online. Progress has already been required to submit their application made in some cities. In Cluj-Napoca, for Another example comes from Georgia. through this electronic system, uploading example, the City Hall has been issuing There, a one-stop shop consolidated all the technical and architectural plans. various certificates electronically since all construction approvals from sev- The Building Department then asks other April 2017. Builders can now obtain eral departments (such as the water util- authorities to review and approve the urban planning certificates, sanitation ity, the electricity utility, the Ministry of plans through the system.17 Companies clearances and building permit exten- Culture and the Ministry of Environment can also use the system to request an sions without any need to interact with Protection) into one approval process. occupancy permit. However, the system municipal employees. This cut the number of procedures for could benefit from further improvements. dealing with construction permits by 10, For example, officials noted that it can Another example of good practices and the time by 70 days. be challenging to review the plans and comes from Portugal. Lisbon has adopted drawings on a single computer screen of a tracking system that is automatically Hungary has gone a step beyond physi- inadequate size and that for this reason updated once the final inspection takes cal one-stop shops by introducing an they sometimes ask applicants to submit place. The certificate of occupancy is electronic platform allowing all agencies a hard copy. ready immediately after the inspection. DEALING WITH CONSTRUCTION PERMITS 45 Clarify the responsibilities of Unit and the Building Department. While other units within the City Hall. To obtain supervisory agents relative in theory these could be done through a an urban planning certificate in Craiova, to municipalities and other joint site visit, in practice the authorities for example, an entrepreneur must stakeholders in the construction inspect the building separately most of present an extract of the general urban permitting process the time. The Building Department could plan (issued by the same Urbanism BULGARIA coordinate a joint inspection, reducing Department) and a certificate of street In Bulgaria construction supervision com- the number of steps for entrepreneurs. nomenclature (from another City Hall panies are legally mandated to collect the department) to be assigned a street necessary documentation and blueprints Romania provides a good example. address. Getting these documents adds for a proposed building project, carry out Within 15 days after notification of two weeks to the process—yet both technical reviews and obtain the relevant the completion of construction, a final documents could easily be obtained permits from the municipality on the inspection must be organized with an through an internal system for sharing investor’s behalf.19 Once the project is “acceptance commission”—a body made information within the City Hall. officially approved, these companies also up of the investor, technical experts and supervise the construction activities. local administration officials. They all visit A third opportunity relates to the require- the site together, eliminating the need ment that entrepreneurs register their But some of the roles played by these for the investor to wait for multiple site construction project with the Order of companies—and the added value of inspections. Architects and pay a stamp duty before those roles—are contested. The compa- applying for a building permit. In reality, nies are chosen and paid directly by the Look for easy ways to simplify this step is not a registration but simply investor, and their responsibilities rela- construction permitting a verification that the architects involved tive to the municipality and investor are ROMANIA in the project have the proper licenses unclear. Both public officials and private Reform efforts often focus on broad, and registrations. Instead, the Order of sector practitioners noted that these long-term goals even though opportuni- Architects could list all licensed architects companies sometimes lack impartial- ties exist for simpler reforms that are on its website and the City Hall could ity, often provide superficial reviews and easier to implement. There are sev- verify qualifications against this list after supervision, and essentially duplicate eral such opportunities in Romania. One receiving the building permit application. work already done by the architects.20 As relates to the land registry excerpt that The City Hall could also collect the stamp a result, municipalities often end up car- an entrepreneur must obtain from the duty on behalf of the Order of Architects. rying out additional reviews in an attempt National Agency for Cadastre and Land to ensure public safety and avoid legal Registration (NACLR) before obtain- disputes. ing an urban planning certificate. The excerpt, which provides information on To reduce delays and eliminate the the legal status of the land plot, remains duplication of tasks between architects valid for only 30 days—even though the and supervision companies, Bulgarian land’s status is unlikely to change in such authorities should clarify the roles and a short period. When applying for a build- responsibilities of these companies. To ing permit about two to three months ensure a comprehensive view of the later, the entrepreneur must therefore problem, discussions should involve obtain another land registry excerpt. This architects, construction sector practitio- requirement imposes an additional step ners, public officials and the supervision for entrepreneurs, along with extra cost companies themselves. and time. In many economies land regis- try excerpts remain valid for six months Consolidate final inspections and to a year. Extending the validity of land approvals upon completion of registry excerpts in Romania would be construction an easy way to simplify the construction HUNGARY permitting process. While Hungary requires fewer preap- provals than Bulgaria and Romania, it Opportunity also exists to simplify mandates three different final inspections document requests. In some cities the once construction is completed: from the Urbanism Department requests docu- Fire Protection Unit, the Public Health ments that it could obtain directly from 46 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 11. In Budapest the fee is charged as follows: HUF NOTES 100,000 (EUR 323) for the water connection + HUF 373,000 (EUR 1,204) per cubic meter of daily water consumption for the water 1. Data for 2015 from the Eurostat database, utility public development contribution + http://ec.europa.eu/eurostat/data HUF 539,000 (EUR 1,740) per cubic meter /database?node_code=sts_cobp_a. of daily sewage flow for the sewerage utility Data for 2016 are not yet available. public development contribution + HUF 2. Doing Business database (2006–16 editions); 40,259 (EUR 130) for the on-site inspection João Costa Branco De Oliveira Pedro, Frits of the sewerage connection. In Debrecen Meijer and Henk Visscher, “Comparison of the fee is charged as follows: HUF 142,000 Building Permit Procedures in European Union (EUR 458) for the water connection + HUF Countries” (Royal Institution of Chartered 42,000 (EUR 136) per cubic meter of daily Surveyors, Salford, UK, 2011). water consumption for the water utility public 3. “Standards in Construction: The Eurocodes,” development contribution + HUF 57,000 (EUR EU Science Hub, European Commission, last 184) per cubic meter of daily sewage flow modified July 14, 2016, https:/ /ec.europa.eu for the sewerage utility public development /jrc/en/research-topic/standards contribution. The Doing Business case study -construction-eurocodes. assumes a daily water consumption of 0.7 4. Sonia Hamman, “Housing Matters,” Policy cubic meters and a daily sewage flow of 0.6 Research Working Paper 6876 (World Bank, cubic meters. Washington, DC, 2014). 12. Ploiesti has the smallest population among 5. The six preapprovals in Bulgaria are an the nine Romanian cities, and Craiova the updated cadastral extract from the cadastre, a third smallest after Brasov. In these cities road project visa (equivalent to a permit to proceed traffic therefore does not pose major problems with the design plans) from the municipality, a and such clearances are deemed unnecessary. preliminary contract with the water company, In Bucharest clearance from the Circulation a decision from the Regional Inspectorate Committee is sometimes necessary, of Environment and Water on whether the depending on the location of the project. For project requires a full environmental impact the warehouse in the Doing Business case assessment, a preliminary energy efficiency study it would not be required, since the assessment from a licensed expert and an building would be located on the periphery of evaluation of the project from a licensed the city. construction supervision company. The six 13. The representatives of the utility companies in Romania are an urban planning certificate will also meet to check whether all the from the city hall; project clearances from the necessary clearances are in place for obtaining Health Department, the Environment Agency the building permit (which is not always done and the Inspectorate of Emergency Situations; in the other cities). registration of the project with the Order 14. Because information is fragmented among of Architects; and an updated land registry several laws and regulations, municipalities excerpt from the cadastre. often receive incomplete applications or 6. The World Bank Group has had a long- drawings and plans requiring substantial standing engagement in Bulgaria’s water amendments. This exacerbates the sector through the Municipal Infrastructure administrative backlog for the permit- Development Project. According to the new issuing authorities. Moreover, forms are not 10-year strategy for the sector, rehabilitation standardized within the same agency across and construction of water supply and all cities. sewerage networks will require BGN 12 billion 15. Municipalities in Bulgaria, mayor’s offices in (EUR 6.1 billion). EU funds will cover only Hungary and city halls in Romania. 30–40% of the total capital investments 16. The entrepreneur would also have to advertise needed until 2020. The rest will have to the project at the city hall and in local come from the central government and the newspapers. water utilities, requiring that the utilities 17. Such authorities may include the Fire substantially improve their efficiency as well Protection, Public Health and Environment and as adjust their pricing. Conservation Units. 7. This is the first step of the construction 18. This serves as notification to the Building control process. The “carcass” construction Department of the completion of construction. phase is considered to be completed once the 19. The use of supervision companies is foundation, walls and roofing have been done. mandatory only for certain categories of 8. Dealing with construction permits also costs buildings, which would include the Doing 4.6% of the warehouse value in Burgas, but Business case study warehouse. when the percentage values are rounded to 20. Interviews with public and private officials in two decimal places the cost is higher in Sofia Bulgaria by World Bank Group staff members, (4.64%) than in Burgas (4.58%). June 2015. 9. Interviews with public officials in Bulgaria, Hungary and Romania by World Bank Group staff members, October 3–21, 2016. 10. Interviews with public officials in Bulgaria, Hungary and Romania by World Bank Group staff members, October 3–21, 2016. Getting Electricity MAIN FINDINGS ƒƒ Among the three countries, getting electricity is easiest and least costly in Hungary, where it requires five procedures and costs 93.9% of income per capita. But it is fastest in Romania, where it takes 195 days on average. Varna has the fastest process in Bulgaria (200 days), Szekesfehervar the fastest one in Hungary (227 days) and Iasi the fastest one in Romania (173 days). ƒƒ Getting electricity takes much longer in all three countries than in any other member state of the European Union. This is largely because of the multiple clearances required before the construction of the connection starts and the inspections needed after it is completed. ƒƒ On average, the cities benchmarked in Hungary receive 7 of 8 possible points on the reliability of supply and transparency of tariffs index, those in Romania 6.7 points and those in Bulgaria 5.7. Among the 22 cities benchmarked, only Szeged (Hungary) obtains the maximum score. All others can improve the reliability of electricity supply by reducing the number of outages, their duration or both. ƒƒ Going forward, the connection process could be made more efficient by streamlining preconnection approvals, reducing the number of approvals and inspections required and better communicating the process and requirements to customers. 48 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA I n today’s highly competitive, global- According to global data reported by regulated largely at the national level and ized economies the speed at which Doing Business 2017, entrepreneurs in monitored by a regulatory agency.3 As a businesses can bring new products Austria and Germany can connect their result, the process is quite standardized to market has a big impact on their com- facilities to the network in less than a in each country, requiring five procedures petitive edge and performance. Whether month, while those in Bulgaria, Hungary in Hungary, five to six in Bulgaria and supplying other businesses or their own and Romania need to wait longer— eight to nine in Romania (figure 5.1). retail outlets, entrepreneurs facing a delay more than four months in Bulgaria, six may miss a narrow window of opportu- months in Romania and more than eight To get a new electricity connection, entre- nity, losing out to faster competitors. The in Hungary.2 These three, along with preneurs have to interact primarily with loss can be permanent: even the bright- Cyprus, are the four EU member states the distribution utility. There are several est innovation can become obsolete if it with the longest process to get electricity operating in each country, with each util- takes too long to reach customers. as measured by Doing Business. Speeding ity serving a designated geographic area up that process could make it easier for (figure 5.2). Distribution utilities are key So for an entrepreneur who needs to get a entrepreneurs in Bulgaria, Hungary and players in the connection process in all warehouse up and running before starting Romania to start new ventures—and to three countries, though their role varies. operations, the time it takes to obtain an compete effectively with their peers in In Bulgaria, depending on the type of con- electricity connection for that warehouse other EU member states. nection involved, either the distribution can be critical. Research shows that utility or the entrepreneur may assume faster, simpler and less costly connection the responsibility for preparing the design processes are associated with better firm HOW DOES GETTING of the connection, obtaining the autho- performance, especially in industries with ELECTRICITY WORK IN rizations needed and carrying out the large electricity needs.1 BULGARIA, HUNGARY AND works. In Hungary, once the entrepreneur ROMANIA? has submitted an application for a con- How long it takes to get an electric- nection, the distribution utility is respon- ity connection varies widely across In all three countries the process of sible for obtaining all the authorizations member states of the European Union. obtaining an electricity connection is and completing the connection works. WHAT DOES GETTING ELECTRICITY MEASURE? Doing Business records all procedures required for a business to obtain a perma- Getting electricity: measuring efficiency, nent electricity connection and supply for a standardized warehouse. These pro- reliability and transparency cedures include applications and contracts with electricity utilities, all necessary Rankings are based on distance to inspections and clearances from the distribution utility and other agencies, and frontier scores for four indicators the external and final connection works. To make the data comparable across Days to obtain Cost to obtain a locations, several assumptions about the warehouse and the electricity connec- an electricity connection, as % of connection income per capita tion are used. The location of the warehouse is assumed to be within city limits, the subscribed capacity of the connection 140 kilovolt-amperes (kVA), and the length of the connection 150 meters. 25% 25% Time Cost Doing Business also measures how reliable the supply of energy is and how trans- 25% 25% parent the consumption tariffs are. Its reliability of supply and transparency of tar- Procedures Reliability of supply and iffs index encompasses quantitative data on the duration and frequency of power transparency of tariffs outages as well as qualitative information on several aspects: the mechanisms put in place by the utility for monitoring power outages and restoring power sup- Steps to file a connection Power outages ply, the reporting relationship between the utility and the regulator for power out- application, prepare and regulatory a design, complete mechanisms in ages, the transparency and accessibility of tariffs and whether the utility faces a works, obtain approvals, place to monitor go through inspections, and reduce them; financial deterrent aimed at limiting outages. The index accounts for one-fourth of install a meter and transparency of the distance to frontier score for getting electricity (see figure). In addition, Doing sign a supply tariffs contract Business records the price of electricity in each location covered.a a. While Doing Business records the price of electricity, it does not include these data when calculating the distance to frontier score or the ranking on the ease of getting electricity. GETTING ELECTRICITY 49 FIGURE 5.1  Getting electricity takes five procedures in all the cities in Hungary and most in Bulgaria—but nine in most of the cities in Romania BULGARIA HUNGARY ROMANIA Procedure Agency Procedure Agency Procedure Agency Apply for and await preliminary Distribution utility Submit application for grid Distribution utility Submit application for connection Distribution utility connection contract connection and await cost estimate and await technical approval Await completion and approval Electrical design firm and Obtain external connection works Distribution utility Receive site inspection Distribution utility of project design construction supervision firm (hired by customer or distribution utility) Apply for and await final Distribution utility Request and obtain permit to install Measurement Technology Sign easement declaration*** Notary connection contract the cables within the meter box** and Meter Controlling Department; distribution utility Obtain construction permit Construction supervision Request and obtain statement on Electricity supplier Submit documents for connection Distribution utility and other authorizations* firm and municipality the agreement to provide contract and receive contract*** electricity** Await completion of external Construction firm (hired Sign contract to obtain meter Distribution utility Sign easement contract*** Electrical contractor works, inspections and issuance by customer or distribution installation, final connection and of “permit to use” (Act 16) utility) and construction electricity flow supervision firm Conclude supply contract and Electricity supplier; Obtain construction permit for Municipality await electricity flow distribution utility connection works Await connection works Electrical contractor Receive final inspection and Distribution utility connection certificate Procedure present in all cities Procedure present in certain cities only Sign supply contract and receive Electricity supplier; meter installation distribution utility Source: Doing Business database. * In cities where the project design has not yet been completed and approved, this procedure also includes the preparation and approval of the design. ** This procedure takes place simultaneously with the previous one. *** The exact nature and order of these procedures vary across cities. In Romania the entrepreneur usually eight), and the cost averages 507.8% of exception of Iasi, the Romanian cities obtains the authorizations and selects a income per capita. Yet despite the greater have the most complex process globally contractor to carry out the works, then procedural complexity and cost, the pro- (with Bangladesh, Nigeria and Tajikistan hands over responsibility for managing cess is fast: getting electricity in Romania also requiring nine procedures). the construction to the distribution utility. takes 195 days on average. In Hungary it In all three countries, once the construc- takes 244 days on average. The Hungarian In all three countries, getting electricity tion is completed, the last step is to sign cities have the highest average score on takes longer than in any other EU mem- a contract with an electricity supplier. the reliability of supply and transparency ber state.5 Even in Iasi, with the fastest The entrepreneur is free to choose the of tariffs index, 7 of the 8 possible points, process among the 22 cities bench- supplier, as electricity markets in all three while the Romanian cities have an average marked (173 days), an entrepreneur countries have been liberalized or are score of 6.7 points and the Bulgarian cities must wait almost three months longer undergoing that process.4 an average of 5.7. than the EU average (90 days)—and five months longer than in the EU economies How do results compare with The number of procedures required in with the fastest processes, Austria (23 other EU member states and all seven cities benchmarked in Hungary days) and Germany (28 days) (figure globally? and in four of the Bulgarian cities (Burgas, 5.3). These long waits are due mostly Among the three countries, getting elec- Plovdiv, Ruse and Varna) matches the to the many authorizations that must be tricity is easiest and least costly in Hungary: EU average of five. Nevertheless, com- obtained before the connection works in all seven cities benchmarked it requires parison with Germany and Sweden, both start—whether by distribution utilities, only five procedures and costs 93.9% of recording the lowest number globally by contractors they hire or by the entre- income per capita (table 5.1). By contrast, in (three), suggests room for improvement. preneurs themselves—as well as the Romania the process takes nine procedures Romania has the highest number among different assessments required once the in all the cities except Iasi (where it takes EU member states. Indeed, with the works are completed. 50 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 5.2  Electricity distribution utilities operate in designated geographic zones in The cost to get electricity in all the the three countries Hungarian cities and in four of the Bulgarian cities (Burgas, Plovdiv, Ruse Bulgaria R O M A N I A and Varna) is lower than the EU aver- Silistra Vidin age of 128.5% of income per capita. In Ruse Energo-Pro Romania, however, even the city with the Montana Pleven Razgrad Dobrich least costly process (Ploiesti, at 423.7% Vratsa Targovishte Shumen Varna of income per capita) records a higher SERBIA Veliko Lovec Tarnovo cost than any other EU member state. On CEZ Gabrovo average, a Romanian entrepreneur faces SOFIA Black Pernik Sliven Burgas a cost four times the EU average and Yambol Sea Stara Zagora more than 25 times the cost in Poland, Kyustendil Pazardzhik Plovdiv EVN the lowest among EU member states (at Blagoevgrad Khaskovo 19% of income per capita). FYR MACEDONIA Smolyan Y T U R K E NATIONAL CAPITAL Kardzali PROVINCE (OBLAST) CAPITALS INTERNATIONAL BOUNDARIES On the reliability of supply and transpar- PROVINCE (OBLAST) BOUNDARIES ency of tariffs index, 16 EU member G R E E C E IBRD 42971 | MAY 2017 states receive the highest possible score (8 points), while eight, including S L O V A K Hungary (on average across cities), NATIONAL CAPITAL Hungary R E P U B L I C COUNTY (MEGYE) CAPITALS UKRAINE receive the second-best score (7). The INTERNATIONAL BOUNDARIES COUNTY (MEGYE) BOUNDARIES BORSOD-ABAÚJ- ZEMPLÉN average scores for Bulgaria (5.7) and Romania (6.7) rank them among the Miskolc SZABOLCS- A U S T R I A Salgotarjan NÓGRÁD ÉMÁSZ SZATMÁR- BEREG Nyiregyhaza Eger bottom four member states, along with Malta (6) and Croatia (5). All 22 cit- Gyor KOMAROM- HEVES GYOR- ESZTERGOM MOSON- Tatabanya SOPRON BUDAPEST BUDAPEST E.ON Debrecen HAJDÚ- BIHAR ies benchmarked obtain the maximum Szombathely VESZPRÉM ELMÜ PEST JÁSZ- NAGYKUN- Szolnok SZOLNOK points on the components related to the VAS Veszprem Szekesfehervar regulation of power outages, financial FEJÉR Kecskemet Zalaegerszeg E.ON Bekescsaba deterrents aimed at limiting outages and ZALA BÉKÉS SLOVENIA TOLNA BÁCS-KISKUN EDF DÉMÁSZ CSONGRÁD the transparency of tariffs—and Szeged (Hungary) obtains the maximum overall Kaposvar SOMOGY Szekszard R O M A N I A Szeged score (8). With the exception of Szeged, Pecs BARANYA all the cities can improve the reliability of S E R B I A C R O A T I A electricity supply by reducing the number IBRD 42972 | MAY 2017 of power outages, their duration or both U K R A I N E (table 5.2). Romania NATIONAL CAPITAL COUNTY (JUDET) CAPITALS How does the process vary BOTOŞANI INTERNATIONAL BOUNDARIES Satu Mare MARAMUREŞ Botoşani COUNTY (JUDET) AND MUNICIPALITY H U N G A R Y SATU MARE Baia Mare Suceava within Bulgaria? (MUNICIPIU) BOUNDARIES Electrica SUCEAVA Transilvania Nord BISTRIŢA- NĂSĂUD DelgazIAŞI Oradea Sălaj SĂLAJ Bistrița Grid Iaşi M O L D O VA In Bulgaria the process to obtain a new BIHOR Piatra- electricity connection is regulated at the CLUJ NEAMȚNeamț Cluj- MUREŞ Napoca Vaslui national level by Ordinance 6 of February Târgu HARGHITA Miercurea- Bacău Mureş VASLUI Cuic BACĂU ARAD ALBA Alba Electrica 24, 2014, on the accession of produc- Arad UKRAINE e-distribuție Iulia Transilvania Sud COVASNA Banat Deva SIBIU ers and customers of electricity to the BRAŞOV Sfântu VRANCEA Timişoara Sibiu Gheorghe HUNEDOARA Focşani GALAȚI TIMIŞ Braşov VÂLCEA e-distribuție Galați transmission or distribution networks Reşiţa Râmnicu ARGEŞ Muntenia BUZĂU Brăila (last modified October 4, 2016); the Law Tulcea CARAŞ - Vâlcea PRAHOVA Buzău SEVERIN Târgu Jiu BRĂILA TULCEA Târgovişte Piteşti Ploieşti Drobeta- GORJ CEZ DÂMBOVIȚA IALOMIȚA e-distribuție on Spatial Planning; and Tariff 14 on the Turmu Severin Oltenia ILFOV fees to be collected by the Ministry of Slobozia MEHEDINȚI BUCUREŞTI BUCHAREST Dobrogea Craiova Slatina CĂLĂRAŞI S E R B I A OLT DOLJ TELEORMAN Alexandria GIURGIU Giurgiu Călăraşi CONSTANȚA Constanța Black Regional Development and Public Works Sea ENEL and by regional authorities (last modi- Muntenia IBRD 42973 | MAY 2017 B U L G A R ISud A fied December 13, 2016). Municipalities nevertheless retain some responsibility, Note: Since March 1, 2017, the utility operating in Szeged (Hungary) has been DÉMÁSZ Zrt. notably in setting fees for construction GETTING ELECTRICITY 51 TABLE 5.1  Getting electricity in Bulgaria, Hungary and Romania—where is it easier and where is power supply more reliable? Distance to Cost Reliability of supply and frontier score Procedures Time (% of income transparency of tariffs index City (Country) Rank (0–100) (number) (days) per capita) (0–8) Szeged (Hungary) 1 67.46 5 238 93.9 8 Szekesfehervar (Hungary) 2 65.53 5 227 93.9 7 Burgas (Bulgaria) 3 65.49 5 227 107.1 7 Pecs (Hungary) 4 65.21 5 230 93.9 7 Plovdiv (Bulgaria) 5 65.06 5 231 107.1 7 Debrecen (Hungary) 6 63.36 5 247 93.9 7 Budapest (Hungary) 7 63.25 5 257 93.9 7 Gyor (Hungary) 8 63.25 5 277 93.9 7 Miskolc (Hungary) 9 61.76 5 233 93.9 6 Varna (Bulgaria) 10 59.05 5 200 107.1 4 Iasi (Romania) 11 57.76 8 173 463.9 7 Ruse (Bulgaria) 12 54.71 5 240 107.1 4 Pleven (Bulgaria) 13 54.66 6 258 516.3 6 Sofia (Bulgaria) 14 54.64 6 262 523.0 6 Bucharest (Romania) 15 53.23 9 174 546.5 7 Craiova (Romania) 16 53.01 9 177 511.1 7 Oradea (Romania) 17 50.80 9 199 454.8 7 Cluj-Napoca (Romania) 18 50.41 9 202 473.8 7 Brasov (Romania) 19 49.56 9 181 476.9 6 Constanta (Romania) 20 49.06 9 209 666.3 7 Ploiesti (Romania) 21 47.22 9 204 423.7 6 Timisoara (Romania) 22 43.56 9 234 553.1 6 Source: Doing Business database. Note: Rankings are based on the average distance to frontier score for the procedures, time and cost associated with getting electricity as well as for the reliability of supply and transparency of tariffs index. The distance to frontier score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). Budapest and Gyor have the same score despite the difference in the time recorded for the two cities because in both cases the time exceeds the worst performance, defined as the 95th percentile among all economies in the Doing Business sample (248 days). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. permits and other approvals required for utility CEZ operates, the common practice days) in Varna to nine months (262 days) connection works. would be to connect the warehouse to the in Sofia. The variation in time is driven by medium-voltage network. In this case the two main factors: the number of agencies Among the six Bulgarian cities, the con- entrepreneur bears all the responsibility.7 approving the design, and the type of nection process is less complex in Burgas, The entrepreneur hires private companies connection involved. In Varna only the Plovdiv, Ruse and Varna, where it requires to perform the various tasks—one com- distribution utility and the municipal- five procedures, and more complex in pany to prepare the design of the new con- ity approve the design at this stage of Pleven and Sofia, where it takes six—a nection, another one to buy the material the process.8 In the other five cities the difference that stems from the type of and complete the works, and still another to utilities responsible for such services as connection involved. In Burgas, Plovdiv, coordinate and supervise the construction. gas, water, heating and telecommunica- Ruse and Varna, where the warehouse in Even so, the process is more burdensome tions also need to provide clearances, the Doing Business case study would com- than in the other four cities, as it involves which takes about a month.9 Moreover, monly be connected to the low-voltage one additional procedure for the prepara- in Pleven and Sofia, where the connection network, the distribution utility coordinates tion of the design. would be to the medium-voltage net- the entire process, from the signing of the work and would therefore require a new final contract to the issuance of the permit An entrepreneur in Bulgaria should substation, the entrepreneur has to wait to use the newly built connection.6 But in expect to devote substantial time to get- one month more: the installation of the Pleven and Sofia, where the distribution ting electricity, from seven months (200 substation extends the works by 17 days, 52 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 5.3  While getting a new connection takes only three months on average in the European Union, it takes more than six in Romania and around eight in Bulgaria and Hungary EFFICIENCY OF GETTING ELECTRICITY Procedures Time Cost (number) (days) (% of income per capita) 1 0 Japan (global best) 0 Korea, Rep.; St. Kitts and Nevis (global best) Poland (EU best) 20 20 Austria (EU best) 2 40 80 80 All 7 Hungarian cities 100 Germany, Sweden 3 EU average 4 Bulgarian cities (EU and global best)* 100 120 EU average 170 Iasi, Bucharest 4 140 Craiova 180 Brasov 420 Ploiesti All 7 Hungarian cities, 190 EU average 5 4 Bulgarian cities 440 200 Oradea, Varna Oradea Cluj-Napoca, Ploiesti 460 Constanta Iasi 6 Pleven, Sofia 210 Cluj-Napoca 480 Brasov 220 Burgas, Szekesfehervar 500 7 230 Pecs, Plovdiv Craiova Miskolc, Timisoara Pleven 240 Szeged 520 Sofia Ruse 8 Iasi 540 250 Debrecen Bucharest Budapest, Pleven 560 Timisoara 260 9 8 Romanian cities Sofia 270 660 Constanta Gyor 10 280 680 RELIABILITY OF SUPPLY AND TRANSPARENCY OF TARIFFS Index (0–8) 26 economies (global best)** 8 Szeged EU average 7 Burgas, Plovdiv, 5 Hungarian cities, 6 Romanian cities Pleven, Sofia, Miskolc, 6 Brasov, Ploiesti, Timisoara 5 4 Ruse, Varna 3 2 Bulgarian city 1 Hungarian city Romanian city 0 Source: Doing Business database. Note: The averages for the EU are based on economy-level data for the 28 EU member states. * Fourteen non-EU economies also have three procedures: the Comoros; Hong Kong SAR, China; Kenya; the Republic of Korea; the former Yugoslav Republic of Macedonia; the Federated States of Micronesia; the Russian Federation; San Marino; St. Vincent and the Grenadines; Switzerland; Taiwan, China; Timor-Leste; Togo; and the United Arab Emirates. ** The 26 economies with a score of 8 include 16 EU member states: Belgium; Cyprus; the Czech Republic; Estonia; Finland; France; Germany; Ireland; Lithuania; the Netherlands; Portugal; the Slovak Republic; Slovenia; Spain; Sweden; and the United Kingdom. The other 10 are non-EU economies: Belarus; Hong Kong SAR, China; Japan; the Republic of Korea; Malaysia; Norway; the Russian Federation; Taiwan, China; the United Arab Emirates; and Uzbekistan. GETTING ELECTRICITY 53 TABLE 5.2  Except for Szeged in Hungary, all the cities have scope to improve the reliability of electricity supply Bulgaria Hungary Romania Burgas, Ruse Plovdiv Miskolc Szeged Ploiesti Oradea Reliability of supply and transparency of tariffs index (0–8) 4 7 6 8 6 7 Total duration and frequency of outages per customer a year (0–3) 1 2 1 3 1 2 System average interruption duration index (SAIDI) 11.1 2.6 5.5 0.7 8.3 1.2 System average interruption frequency index (SAIFI) 6.4 1.1 2.2 0.4 2.5 0.9 Mechanisms for monitoring outages (0–1) 0 1 1 1 1 1 Does the distribution utility use automated tools to monitor outages? No Yes Yes Yes Yes Yes Mechanisms for restoring service (0–1) 0 1 1 1 1 1 Does the distribution utility use automated tools to restore service? No Yes Yes Yes Yes Yes Regulatory monitoring (0–1) 1 1 1 1 1 1 Does a regulator—that is, an entity separate from the utility— Yes Yes Yes Yes Yes Yes monitor the utility’s performance on reliability of supply? Financial deterrents aimed at limiting outages (0–1) 1 1 1 1 1 1 Does the utility either pay compensation to customers or face fines Yes Yes Yes Yes Yes Yes by the regulator (or both) if outages exceed a certain cap? Communication of tariffs and tariff changes (0–1) 1 1 1 1 1 1 Are effective tariffs available online? Yes Yes Yes Yes Yes Yes Are customers notified of a change in tariff ahead of the billing cycle? Yes Yes Yes Yes Yes Yes Source: Doing Business database. Note: For each country the table shows the results for the cities obtaining the lowest and highest scores on the reliability of supply and transparency of tariffs index. Where two or more cities in a country obtain the same score, the worst- and best-performing cities were selected on the basis of the sum of their scores on the duration and frequency of power outages as measured by SAIDI and SAIFI. If both the SAIDI and SAIFI values are between 0 and 1, 3 points are assigned; if both are between 1 and 4, 2 points are assigned; if both are between 4 and 12, 1 point is assigned. and an additional inspection by the distri- for the right to use the new connection tariffs index (7 of 8 points). Customers in bution utility required once the works are once it is built (52.3 days) (figure 5.4). these two cities experience less frequent completed takes another 10 days.10 and shorter power outages on average The cost to obtain a connection is almost (1.12 a year, for a total duration of 2.63 In all six cities the issuance of the con- five times as high in Pleven (BGN 59,544) hours a year) than those in the other struction permit is among the require- and Sofia (BGN 60,319) as in the other four. In addition, the distribution utility ments taking the most time (from 38 four cities (BGN 12,349). The difference operating in Burgas and Plovdiv (EVN) days in Varna to 45 in Pleven, Plovdiv and is again due to the type of connection, uses automated tools to monitor outages Sofia)—a step regulated at the national with a connection to the medium-voltage and restore service—as does the utility in level but carried out by municipalities. network involving many more costs than Pleven and Sofia (CEZ). By contrast, the Municipalities also issue other authori- one to the low-voltage network. In Pleven one in Ruse and Varna (Energo-Pro) uses zations needed to start the works (for and Sofia the entrepreneur not only pays manually operated systems. example, a permit for waste transport for the design, the material, the works and as well as a clearance and schedule for the services of the construction supervi- How does the process vary closing streets).11 Another substantial sion company, but also covers the admin- within Hungary? source of delay is the “permit to use” istrative fees due to the municipality, the Getting an electricity connection in (Act 16), required for the signing of the cadastre, the nonelectrical utilities and the Hungary, as a nationally regulated pro- supply contract. This permit is issued by distribution utility.12 In the other cities the cess, is fairly standardized, following the the Directorate for National Construction entrepreneur simply pays a connection same five procedural steps in all cities. Control (DNSK) within 30 days. On aver- fee, which is set by the national regulator. The fee schedules are also regulated at age across the six cities, entrepreneurs the national level.13 The connection pro- spend 141 days—60% of the entire con- Burgas and Plovdiv earn the highest score cess, as regulated by the 2007 Electricity nection process—waiting for clearances among the six Bulgarian cities on the Law (LXXXVI) and Regulation 382/2007 before the works start (88.3 days) and reliability of supply and transparency of (XII.23), starts with the customer 54 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 5.4  Getting clearances before the works start and after they are completed While the connection process involves accounts for 60% of the time to get electricity in Bulgaria the same procedures and cost across cities in Hungary, there are differences in Clearances before the works start the time it takes to get electricity and in Varna the reliability of networks. The variation in time is driven by how long it takes for Burgas the utility to obtain all the clearances and Pleven approvals needed to start the connection works. Approvals have to be obtained Plovdiv from other utilities (for gas, telecom- Sofia munications, and water and sewerage),15 Ruse the notary in the mayor’s office, the Environment Protection Authority, the 0 10 20 30 40 50 60 70 80 90 100 110 local road department, the Hungarian Time (days) Road Authority, the land registry and the Issuance of a compliance report by the construction supervision company county’s Measurement Technology and Design approval by the distribution utility and other utilities Meter Controlling Department—as well Signing of a guarantee contract for pavement restoration with the municipality* as from neighboring landowners whose property is affected. The regulation Design approval and issuance of the construction permit and other authorizations by the municipality establishes a time frame for each author- ity to provide its approval, but in practice Clearances after the works are completed the authorization process can take Burgas longer—from a minimum of 200 days in Szekesfehervar to 250 days in Gyor.16 Plovdiv In contrast, the actual construction work Ruse on-site takes only 2–3 days. Varna Pleven Even though the same utility company (E.ON) operates in both Szekesfehervar Sofia and Gyor, obtaining all the clearances 0 5 10 15 20 25 30 35 40 45 50 55 60 takes longer in Gyor because of the large Time (days) amount of investment that this city has attracted in recent years, straining the Assessment by the distribution utility (only for connections to the medium-voltage network) capacity of utilities and public agencies. Pavement inspection by the municipality and signing of the Act 15 (verifying the compliance of the new connection) by all parties Declaration of the new connection to the Geodesy, Cartography and Cadastre Agency Szeged, where customers experience Issuance of the “permit to use” (Act 16) by the Directorate for National Construction Control on average less than 1 outage a year, for a total duration of less than 1 hour, Source: Doing Business database. earns the maximum score of 8 on the * The data are as of December 2016, when the signing of a guarantee contract with the municipality was required in reliability of supply and transparency of five of the six cities (in Pleven this requirement was introduced only in January 2017). The time for signing the contract is recorded only for Sofia, where it falls under the responsibility of the entrepreneur. In the other four cities distribution tariffs index (figure 5.5). Miskolc, where utilities are responsible for the entire process and have preestablished contracts with the municipality. customers experience on average 2.2 outages a year, for a total duration of submitting an application to the utility. utility prepares the design, obtains all the more than 5.5 hours, receives a score of The application must include a site map necessary approvals from third parties on 6 on the index. The other five cities all showing the connection point, specify the behalf of the customer and carries out receive a score of 7. voltage level needed and provide proof of the external connection works.14 Finally, eligibility to request the external connec- before the electricity can start to flow, the How does the process vary tion. The utility checks the application customer obtains a permit from the utility within Romania? and develops a proposal that includes to install the cables within the meter box, In Romania the connection process is the preliminary technical details, a time chooses an energy supplier from among regulated by Electricity Law 13/2007 frame and the cost estimate. Once the those serving the area and receives the and by Law 123/2012 on Electricity and customer accepts the proposal, the meter installation from the utility. Gas. The first step is for the customer to GETTING ELECTRICITY 55 FIGURE 5.5  Customers in Szeged experience shorter and less frequent power outages contract with one of the energy suppliers than those in the other Hungarian cities that operates in the area. The utility then installs the meter, and electricity starts Average hours of power outages per year for a customer flowing. 6 5 Among the nine Romanian cities, obtain- 4 ing an electricity connection is easiest in 3 Iasi, where it takes eight procedures and 173 days, and most difficult in Timisoara, 2 where it requires nine procedures and 1 234 days. In Iasi, the only one of the cit- 0 ies where eight procedures are required, ed ar or es t c s ce n ol c customers do not need to sign either an eg rv Gy ap Pe re isk Sz he d b e sfe Bu De M easement declaration before a notary or ek an assignment agreement with a con- Sz tractor, while all the other cities require Average number of power outages per year for a customer one document or the other. 2.5 2.0 In time requirements, the main difference among the cities is in the completion of 1.5 the connection works. This requires 52 1.0 days in Iasi and two months in Brasov, Cluj-Napoca, Constanta, Craiova and 0.5 Oradea—but three months in Bucharest 0 and Ploiesti and four in Timisoara. ed ar or ce n es t c s ol c Obtaining a construction permit from the eg rv Gy re ap Pe isk Sz he b d esfe De Bu M municipality, the second longest step in ek Sz the process, can take from one month (as in Bucharest) to three months (as Source: Doing Business database. in Constanta). Receiving the connection Note: Based on data for the system average interruption duration index (SAIDI) and the system average interruption frequency index (SAIFI). contract from the utility takes 25 days in Cluj-Napoca and Oradea, while it takes obtain the technical information on the The customer chooses an electrical only 10 days in the other cities. Receiving connection and the cost estimate from contractor and signs a connection con- the final inspection takes 10 days in the utility.17 In Romania a warehouse like tract with the utility.18 The contractor Craiova, Iasi, Ploiesti and Timisoara, but the one in the Doing Business case study is then hired by the utility. In five cities 15 days in Constanta, 17 in Brasov and 20 is typically connected to the medium- (Brasov, Cluj-Napoca, Craiova, Oradea in Cluj-Napoca and Oradea. Receiving the voltage network, leading to a need to and Ploiesti) the customer needs to sign meter installation after a supply contract install a transformer on the customer’s a formal assignment agreement with the is signed requires only 2 days in Brasov, private land. Because of the lack of contractor. Bucharest, Constanta, Oradea, Ploiesti clarity in the regulation, the process of and Timisoara, while it takes 5 days in granting the distribution utility access to Once hired by the utility, the contractor is Cluj-Napoca and Craiova, and 10 in Iasi. the private land to install the new trans- responsible for preparing the design and former varies across cities. In Brasov the executing the works as well as for obtain- Among the nine cities, Ploiesti has the customer signs an easement declaration ing all the required authorizations, such as lowest cost for getting a new connection before a notary. In Cluj-Napoca, Craiova, the construction permit from the munici- (RON 148,755, or 423.7% of income per Iasi, Oradea and Ploiesti the customer pality, the environment approval, the fire capita), and Constanta the highest cost signs an easement contract, again before safety clearance and the clearances from (RON 233,935, or 666.3% of income per a notary, in this case paying a higher other utilities with underground networks capita). The difference is driven mainly by notarization fee. In Bucharest, Constanta in the area. Once the construction works the cost of the connection works required and Timisoara the customer signs both are finished, the utility inspects the new for the Doing Business case study—RON an easement declaration and, later on, an connection and issues a connection 130,000 in Ploiesti, but RON 220,000 easement contract. certificate. The customer signs a supply in Constanta. Other differences among 56 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA cities depend on the cost of the design within the given time frame, the approval to the length of the process because it (which ranges from RON 5,000 in is automatically granted. Italy, Poland means reviewing the same application Oradea to RON 13,500 in Ploiesti) and and Spain are among the countries that twice. Lithuania offers another example. on the fees for the construction permits have adopted silence-is-consent rules, There applicants submit only one con- from the municipality (ranging from as illustrated in earlier Doing Business solidated form to the municipality, which RON 2,200 in Oradea to RON 7,000 in subnational studies.20 then collects the clearances from differ- Brasov). In addition, in some cities an ent departments on their behalf. excavation permit must be obtained from Even when the legal time limits are the municipality.19 respected, the overall length of the pro- In Bulgaria, Hungary and Romania appli- cess remains excessive. This suggests cants also need to obtain preconnection Data on power outages also show differ- a need to review and tighten the time approvals from utilities and, in some cas- ences among the nine cities. Customers frames established by law, especially for es, from the environment agency or the in Brasov, Ploiesti and Timisoara experi- simple, standard connections. Modern fire department. One-stop shops could ence longer and more frequent outages, regulations establish different levels of eventually be set up to coordinate the and these three cities receive a score of 6 scrutiny—and therefore different time process and issue a single consolidated on the reliability of supply and transpar- frames—for different levels of complex- approval to the applicant. The challenge ency of tariffs index. The other six cities ity. This approach allows approvals for is persuading the agencies to send repre- receive a score of 7. Ploiesti has the lon- simple connections to be fast-tracked, sentatives to a common location and give gest total duration of outages (averaging freeing public authorities to focus on them enough decision-making power eight hours a year for a customer), and riskier projects. To be effective, risk- so that applications can be processed Timisoara the most frequent outages based approaches need to include a without delays. One solution would be (averaging more than five a year for a comprehensive classification of risks. to work out a part-time system in which customer). In Brasov customers experi- representatives from the different agen- ence on average more than four outages Organize back-office cies work at a single access point at set a year, for a total duration of almost five preconnection approvals times and days each week. hours. internally BULGARIA, HUNGARY, ROMANIA The most modern one-stop shops are In Bulgaria and Romania preconnection virtual, such as a web-based platform WHAT CAN BE IMPROVED? approvals are needed from several differ- allowing applicants to request all clear- ent municipal offices, such as the public ances simultaneously by submitting one This chapter’s review of the process of roads office, the waste management online form. If all the relevant authorities getting a new electricity connection and administration and the excavation per- were linked to a single system in which the reliability of power supply in Bulgaria, mits department. In addition, the munici- notifications and documents could be Hungary and Romania points to several pality issues a final construction permit exchanged electronically, the process areas of possible improvement. authorizing the start of the connection would be faster and more streamlined. works. But in granting this construction Introducing this type of online process Introduce silence-is- permit the municipality already implies can be a daunting task. Such projects consent rules and risk-based that all municipal authorities approve are typically linked to larger regulatory approaches to reduce delays in the connection. Consolidating these reforms and e-government programs. To preconnection approvals approvals internally would reduce delays succeed, they need to include training for BULGARIA, HUNGARY, ROMANIA for customers and municipalities alike. staff to operate and maintain electronic All three countries have a long process It would also avoid the risk of different systems. They also require the right tech- for getting an electricity connection municipal officials issuing contradictory nology infrastructure and a high level of compared with the rest of the EU. The decisions on the same project. internet penetration. main bottleneck is obtaining the clear- ances needed before the connection Bucharest, Cluj-Napoca, Constanta and Bulgaria, Hungary and Romania could also works start. While regulations in all Iasi have a good practice that could look to the example of cities that partner three countries establish time limits be adopted elsewhere in Romania: in with private companies to make authori- for each agency to issue its clearance, these four cities the construction permit zation processes easier, as some Spanish often these are not respected. Thus includes the excavation permit. Requiring municipalities do. For example, Barcelona a first step could be to introduce a two separate permits, as is done in the works with ACEFAT, and Valencia with silence-is-consent rule—so that when other five Romanian cities, duplicates OCOVAL. These private entities facilitate the approving authority fails to respond efforts for municipal authorities and adds the exchange of information between GETTING ELECTRICITY 57 applicants and public authorities, easing the world, utilities use a geographic Many jurisdictions around the world the workload of agencies that might have information system (GIS), which makes have improved transparency in recent backlogs because of resource constraints. the site visit obsolete. In Mexico, for years. Good practices include making example, the distribution utility devel- land use plans available to all citizens, Identify opportunities to oped a GIS to map the distribution such as by placing the plans online; simplify requirements network in 2011/12 and now no longer developing process maps or guidelines BULGARIA, ROMANIA carries out a physical inspection before for the entire process; and providing clear Reducing the number of steps needed issuing the feasibility study. Similarly, and complete guidelines on application to get an electricity connection is a key in Turkey the utility Boğaziçi Elektrik requirements. Authorities in Vienna, for factor in making the process easier, Dağıtım, taking advantage of the wide- example, have put all planning informa- especially in Romania, where the num- spread use of GIS in the country, now tion on a web-based platform where ber of requirements is much higher checks by GIS to see whether a new users can view zoning plans, land use than in most high-income economies. connection will require installing an policies, and infrastructure capacity and In Romania the customer typically additional transformer. availability. chooses a private contractor to prepare the project and perform the works, but The postconnection process is particu- Review the cost of obtaining a the contractor is then hired by the utility. larly burdensome in Bulgaria, where the new connection This mixed system leads to a series of customer needs to obtain a permit to BULGARIA, ROMANIA extra procedures, such as the signing of use the newly built connection from the The type of connection works varies an assignment agreement between the Directorate for National Construction depending on network capacity and, customer and the contractor, the sign- Control (Act 16). This involves setting in Bulgaria, also on distribution utili- ing of an execution contract between up a commission of all interested par- ties’ practices. If a connection to the the utility and the contractor, and extra ties to assess whether the connection medium-voltage network is required, inspections by the utility. Moreover, is ready for use. Given the length of more complicated connection works because of the lack of clarity in the time spent in obtaining the permission may be necessary. The resulting capital regulation on what is needed for utili- to build the connection, and since the investments are covered by the new ties to carry out works on private land, compliance of the newly built connec- customer. This obligation substantially distribution utilities in Romania require a tion is verified by all parties (Act 15), raises the total connection cost, as notarized easement contract from their this assessment could happen after the is clearly the case in Romania and customers. customer starts to use electricity, to Bulgaria. Covering the cost for a new avoid further delay. transformer represents a financial In addition, obtaining an approval for the obstacle for most small and medium- connection from the utility is a two-step Clarify and better communicate size enterprises. The distribution utility process: the customer needs to first the process and requirements could contribute to the initial capital obtain a preapproval and then the final for getting electricity investment, as is done in Thailand. This connection contract. Romania (and to BULGARIA, HUNGARY, ROMANIA initial investment could be recovered a certain extent Bulgaria) could benefit Utilities should clearly explain to custom- through transparent consumption from considering the simpler process in ers exactly what is needed to obtain tariffs charged to all customers that Hungary (and in such other EU econo- a new electricity connection. Besides connect to the new transformer. mies as Austria and Germany), where making the process more transparent, the customer needs to submit only one this would cut the cost and time for Ensuring that entrepreneurs can obtain a application to get a connection contract. customers by reducing the number of new connection at an affordable price is incomplete or incorrect applications important. Also critical is to ensure that The utility’s inspections—for which the submitted—and thus the administrative distribution utilities can charge connec- customer is typically present, though backlogs. Exhaustive guidelines should tion fees that recover their costs where this is not mandatory—offer another cover information about key steps; the they are responsible for purchasing the opportunity for simplifying the process agencies involved; the documentation material and completing the work. This in Romania. Before providing a cost requirements; and the certificates, per- is an issue in Bulgaria, where distribution estimate, utilities perform external mits and approvals required as well as utilities are required to build new con- inspections to check the surroundings the corresponding time frames and fees. nections at connection fees that are set of the building and determine precisely Clear and complete information should by regulation and have not changed since where cables and the meter should be also be available online and easily acces- 2002.21 installed. In other economies around sible through mobile devices. 58 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Strengthen incentives for reliable 5. Among other EU member states the time would cost around BGN 25,000–35,000, required to obtain electricity ranges from 23 according to respondents. In addition to power supply days in Austria to 137 days in Cyprus. the expenses related to the design, the BULGARIA, HUNGARY, ROMANIA 6. In Bulgaria the responsibility for preparing material, the works, the administrative Regulators in all three countries impose the design, purchasing the material and fees and the services of the construction completing the external works should be supervision company, an entrepreneur in financial sanctions on distribution utili- defined in accordance with Ordinance 6, Sofia also needs to pay a deposit of BGN 2,600 ties if they fail to provide reliable energy paragraph 21. For a connection to the low- to the municipality, to be returned only to their customers. But this does not voltage network, either the distribution utility if the pavement is fully restored after the or the customer can undertake these steps, completion of works. The cost recorded is the always provide adequate incentives as mutually agreed. If the customer takes present value of lost interest earnings on this for distribution utilities to maintain a on the responsibility, the distribution utility deposit. high reliability of supply throughout should then repurchase the material from the 13. Regulation 7/2014 (IX.12), MEKH rendelet, customer—all of which should be reflected in annex 14/7. the year and across their entire zone of the final contract signed by the customer and 14. While in Romania the customer can choose operations. In Bulgaria, for example, the the distribution utility. In practice, however, the contractor whom the utility hires, regulator has set caps on the frequency it is much more common for distribution in Hungary utilities choose and hire the utilities operating in these four cities to retain electrical engineer who prepares the design, and duration of outages and imposes the responsibility, which they carry out by performs the works and obtains the necessary financial sanctions when distribution contracting private companies to complete the clearances and permits. utilities exceed them—but the caps are design and the works as well as construction 15. While in six of the Hungarian cities a single supervision companies to coordinate and utility manages the water and sewerage high and therefore ineffective as financial oversee operations. For a connection to networks, in Budapest two separate utilities deterrents.22 Some utilities in Bulgaria the medium-voltage network, however, the do so. This makes the process of obtaining compensate customers voluntarily, but customer is by law responsible for undertaking approvals even more cumbersome in the these steps (see note 7). capital, which has the second longest only for outages lasting 24 hours or more 7. According to Ordinance 6, paragraph 21, if the connection process among the Hungarian (in the case of CEZ) or 48 hours or more customer is a business and the connection cities. (in the case of EVN). While outages are is to the medium-voltage network, the works 16. The authorization process is regulated by are to be executed by the customer and Regulation 382/2007 (XII.23). infrequent and of short duration in cities, the infrastructure built will remain on its 17. In complex cases the utility provides multiple they tend to be frequent in villages and property. The electricity consumption bill for connection options, and the customer chooses remote regions. business customers tends to be lower for a the one preferred. connection to the medium-voltage network 18. The contractor has to be certified by the than for one to the low-voltage network as a Energy Regulatory Authority (ANRE). result of a difference in the (regulated) price 19. The excavation permit for the case under component for transmission. For example, see analysis costs RON 72 in Brasov, RON 100 the distribution prices on the CEZ website at in Ploiesti, RON 104 in Oradea, RON 250 http:/ /www.cez.bg/en/prices/electricity in Timisoara and RON 600 in Craiova. The NOTES -prices/for-distribution.html. permit is free of charge in Cluj-Napoca, and no 8. In Varna other utilities (gas, water, heating, permit is required in Bucharest, Constanta and 1. Carolin Geginat and Rita Ramalho, “Electricity telecommunications) provide their clearance Iasi. Connections and Firm Performance in 183 at an earlier stage, before the customer 20. See World Bank, Doing Business in Italy 2013 Countries,” Policy Research Working Paper obtains the construction permit for the (Washington, DC: World Bank, 2013), Doing 7460 (World Bank, Washington, DC, 2015). warehouse. They approve the “blueprint,” Business in Poland 2015 (Washington, DC: 2. The time measures for Bulgaria, Hungary a document issued by the cadastre that World Bank, 2015) and Doing Business in Spain and Romania are those for their capital city maps all communication networks around 2015 (Washington, DC: World Bank, 2015). (which is also their largest business city), in the warehouse. The design of the external 21. Connection fees are determined by regulatory accordance with the global Doing Business connection is then prepared based on this decision TS-002 of March 29, 2002. methodology. World Bank, Doing Business blueprint. According to Ordinance 6, paragraph 21, 2017: Equal Opportunity for All (Washington, 9. Supervision companies—which are commonly for connections to the low-voltage network DC: World Bank, 2016). responsible for coordinating the approval distribution utilities have to conduct the works 3. These regulatory agencies are the State process—usually circulate several copies of at their own expense unless the customer Energy and Water Regulatory Commission the design to the different agencies so as to takes on this responsibility, as mutually agreed (DKER) in Bulgaria, the Energy and Public save time. Nevertheless, this step remains with the distribution utility, in which case the Utility Regulatory Authority (MEKH) in long, as each agency takes about a month to installed material will be transferred to the Hungary and the Energy Regulatory Authority provide its clearance. utility upon the completion of the works. (ANRE) in Romania. Each of these agencies is 10. Once the external works are completed, the 22. The caps set by the State Energy and responsible for supervising the national power entrepreneur needs to request a commission Water Regulatory Commission (DKER) are sector (generation, transmission, distribution from the distribution utility, CEZ, to inspect published in “Methodology for Assessing the and supply) as well as electricity prices. and approve the works ahead of the issuance Target Indicators on Reliability of Electricity 4. In Hungary, where liberalization started of the Act 15. and Quality of Services by the Distribution in 2003, the supply market is now fully 11. In Burgas, Pleven, Plovdiv and Sofia Utilities and Suppliers.” For the latest values liberalized: all customers can choose among entrepreneurs obtain these authorizations in published on DKER’s website, see http:// different suppliers, and prices are unregulated. parallel with the construction permit. But in www.dker.bg/files/DOWNLOAD/rule_el_25 In Romania, where liberalization started in Ruse and Varna they need to wait six days .pdf. If distribution utilities exceed these 2007, and in Bulgaria, where it started in 2016, after the permit is issued to obtain them. caps, financial penalties are triggered in prices are not yet fully unregulated for all 12. The purchase of the substation represents accordance with Ordinance 1 of March 18, types of customers. a substantial share of the cost for an 2013, on the regulation of electricity prices, entrepreneur in Pleven or Sofia: for the Doing paragraph 37. Business case study warehouse a substation Registering Property MAIN FINDINGS ƒƒ Among the three countries, registering property is easiest in Hungary, where it requires four procedures, takes 12.5 days on average and costs 5% of the property value. But the process is less expensive in Bulgaria, at an average of 3% of the property value—and in Romania, at 1.4%. ƒƒ Compared with averages for the European Union, registering property takes considerably less time in all 22 cities benchmarked in Bulgaria, Hungary and Romania—and is less costly but also more complex across the cities benchmarked in Bulgaria and Romania. ƒƒ Debrecen has the easiest property registration among the seven cities benchmarked in Hungary as well as among all 22. Oradea outperforms its peers in Romania while Ruse does so in Bulgaria. ƒƒ Hungary’s strong performance on both the efficiency and quality of land administration places the country among the top 10 EU member states on the ease of registering property and at 28 in the global ranking. ƒƒ On the quality of land administration index, the Hungarian cities surpass the EU average thanks to their reliability of infrastructure and geographic coverage, while the Bulgarian and Romanian cities lag behind. 60 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA T he race to transform formerly Hungary provides a telling example. Its invest in private enterprises and to planned economies into properly preservation of land books over more transfer land to more efficient users. In functioning market economies than 150 years, including during com- addition, the ability to access authori- has been an uneven one. Some coun- munism, made it easier to computerize tative information on land ownership tries, especially Central European ones and modernize the land administration reduces transaction costs in financial and the Baltic States, have navigated sector during the transition (box 6.1). markets, making it easier to use prop- the transition more smoothly than oth- Today Hungary places among the top erty as collateral.4 Land registries along ers. Becoming more competitive in an 30 in the Doing Business global ranking of with cadastres identifying the location increasingly global economy was key, 190 economies on the ease of registering of property are tools used around along with reforming the legal and insti- property. Thanks to similar efforts, so do the world to map, prove and secure tutional framework. the Baltic States and several Central and property rights. For governments, hav- Eastern European countries.2 ing reliable, up-to-date information in Providing secure property rights— cadastres and land registries is essen- critical to support investment, produc- With real property (land and build- tial to correctly assess and collect tax tivity and economic growth1—played an ings) accounting for between half and revenues. It also enables governments essential part in achieving competitive- three-quarters of the wealth in most to map out the varying requirements of ness. This entailed not only undertaking countries, having an up-to-date land cities and strategically plan the provi- legal reforms but also creating a reliable information system matters.3 Research sion of services and infrastructure to infrastructure, especially in the form suggests that property owners with meet the greatest needs across each of land records and cadastral maps. secure ownership are more likely to city.5 WHAT DOES REGISTERING PROPERTY MEASURE? Doing Business records the full sequence of procedures necessary for a business to purchase a property from another business and transfer the property title to the buyer’s name so that the buyer can use the property for expanding its business, use the property as collateral in taking new loans or, if necessary, sell the property to another business. It also measures the time and cost to complete each of these procedures. In addition, Doing Business measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution and equal access to property rights (see figure). Registering property: measuring the efficiency and quality of the land administration system Rankings are based on distance to frontier scores for four indicators Days to transfer Cost to transfer Measures whether the land registry and mapping system property between two property, as % of Reliability (cadastre) have adequate infrastructure to guarantee high local companies property value standards and reduce risk of errors Time Cost Transparency Measures whether and how the land administration system makes 25% 25% land-related information publicly available 25% 25% Procedures Quality of land administration Measures the extent to which the land registry and mapping index Coverage system (cadastre) provide complete geographic coverage of privately held land parcels Steps to transfer property so that it can be sold or used Measures the accessibility of conflict resolution mechanisms and Dispute the extent of liability for entities or agents recording land as collateral resolution transactions Equal access Measures the ownership rights of unmarried men and unmarried to property rights women as well as of married men and married women REGISTERING PROPERTY 61 BOX 6.1 A long history of improvements in Hungary’s land administration system The first cadastral surveying in Hungary took place between 1786 and 1790. This effort was triggered by the Law on Parcel Surveying for Hungary, a decree issued by Emperor Joseph the Second, ruler of the Habsburg lands. The initiative was short- lived, however, as all documentation was destroyed soon after the emperor’s death in 1790. But the cadastral surveying was resumed in the 19th century for tax collection purposes, and the country has kept organized property records ever since. Until 1971 land administration was based on a dual system, with both a land register and a land cadastre. By 1981 the country had merged data and offices throughout its territory, establishing a unified land registration system under what is now the Ministry of Agriculture and Rural Development. In 1990 Hungary started a program to modernize the land administration system in collaboration with the EU. The program included setting up computer infrastructure in district land offices across the country as well as implementing legal and op- erational changes that took years. The system was fully computerized by 1997. Hungary then launched a program to digitize cadastral mapping, which succeeded in making cadastral maps in digital format available for the entire territory by 2007. Today the Department of Land Administration (Foldhivatal) covers more than 10 million registered properties across the country. Every property has a unique identification number that is used in both land books and cadastral maps. Since 2007 Foldhivatal has funded itself through revenues generated from services. District land offices across the country communicate through TakarNet, a centralized electronic network that contains de- tailed information on all properties. The system can be accessed for a fee by authorized users, such as bailiffs, public nota- ries, lawyers who deal with land transactions, and banks and other financial institutions. While private individuals cannot join the network, they can access Foldhivatal’s website (Foldhivatal Online), where they can obtain limited information on properties for a fee. The reform of Hungary’s land registry shows that such efforts require not only persistence and innovation but also time. Each of the major reforms and infrastructure improvements since 1971 took around a decade to fully implement (see figure). Today Foldhivatal covers 100% of Hungary’s territory in both its land records and its cadastral maps. This is an achievement: globally, only 22% of economies cover all private land in their land records, and only 24% do so in their cadastral maps. In addition, property registration has become more efficient in Hungary (as represented by Budapest). The time required to register property has steadily fallen, from almost 80 days in 2004 to just 17.5 days today. Meanwhile, the cost has been cut by more than half, from 11% of the property value to 5%.a Moreover, the reliability of records has been strengthened, and the critical ingredients for online property registration have been put in place. Timeline of Hungary’s land administration system 2004: 77.5 days and 11% of property value Time and cost to register property* Modernization and Resumption of cadastral Conversion from a dual computerization of 2016: 17.5 days and First cadastral surveying for tax land administration the system through Digitization of 5% of property value surveying collection purposes system to a unified one an EU program cadastral maps 18th century 19th century 1971–81 1990–97 1997–2007 2016 Sources: Hungary, Department of Land Administration (Foldhivatal), http://www.foldhivatal.hu/; Doing Business database.” *As represented by Budapest. Note: This box is based mostly on information from the portal of the Hungarian Department of Land Administration (Foldhivatal) (http://www.foldhivatal.hu/). a. Doing Business database. 62 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA entrepreneur must pay separate visits to with tax authorities (national and local) HOW DOES REGISTERING the cadastre and land office divisions of along with requirements at the Property PROPERTY WORK IN the NACLR as well as to the municipal Register and GCCA. The time required BULGARIA, HUNGARY AND tax department. In Bulgaria the registra- to register property in Bulgaria aver- ROMANIA? tion process is more complex, requiring ages 13.5 days, and the cost 3% of the separate interactions with the National property value. The Hungarian cities also In Hungary and Romania the land Revenue Agency, the municipal tax score significantly higher on the quality registries and cadastres are under one directorate, the Property Register, the of land administration index (earning 26 umbrella institution—the Department local GCCA office and the Commercial of 30 points) than do the Bulgarian cities of Land Administration (Foldhivatal) in Register. In both Bulgaria and Romania, (19.5 on average) or the Romanian cities Hungary and the National Agency for once the property is registered under the (17 on average). Cadastre and Land Registration (NACLR) buyer’s name, the new owner must regis- in Romania. In Bulgaria the Property ter with the municipality for tax purposes. Hungary’s strong performance on both Register is under the courts and the the efficiency and quality of land admin- Ministry of Justice, while the Geodesy, Among the 22 cities benchmarked, istration places the country among the Cartography and Cadastre Agency registering property is easiest in top 10 EU member states on the ease (GCCA) is an executive agency under the Debrecen (Hungary), most difficult in of registering property and at 28 in the Ministry of Regional Development and Sofia (Bulgaria) (table 6.1). Overall, the global ranking. Romania stands at 57 Public Works. process is easiest in Hungary, where it in the global ranking, and Bulgaria at requires four procedures, takes 12.5 days 60—slightly below the EU average of In all three countries, registering a on average and costs 5% of the property 51 but ahead of Croatia, Germany and property transfer requires the use of value. In the Romanian cities the process France. Indeed, registering property legal professionals—lawyers in Hungary, takes six procedures, 16 days and only takes considerably less time in all cities notaries in Bulgaria and Romania (figure 1.4% of the property value. Transferring benchmarked in Bulgaria, Hungary and 6.1). In Hungary an entrepreneur needs property is most difficult in Bulgaria, Romania than the average for EU mem- to interact only with Foldhivatal and the where it requires eight procedures, ber states—less time than in the Czech Court of Registration. In Romania the mainly because of multiple interactions Republic, Poland, Croatia or France, FIGURE 6.1  Hungary has simpler procedural requirements for transferring property than Bulgaria and Romania BULGARIA HUNGARY ROMANIA Preregistration Preregistration Preregistration Obtain a tax clearance certificate from the Obtain a certified title record from Foldhivatal Obtain cadastral information from the NACLR’s local National Revenue Agency office cadastre division Obtain a tax valuation of the property from Get the sale and purchase agreement signed Obtain a fiscal certificate from the municipal the municipality by a lawyer tax department Obtain a nonencumbrance certificate from Obtain a copy of the buyer’s certificate of Obtain the land book extract (nonencumbrance the Property Register incorporation from the Court of Registration certificate) from the NACLR’s land office division Obtain a sketch of the estate from the Have a notary authenticate the transfer deed local GCCA office Obtain certificates of good standing for the seller and buyer from the Commercial Register Have a notary execute the transfer deed Registration Registration Registration Register the notarized deed with the Register the title with Foldhivatal Register the title with the NACLR Property Register Postregistration Postregistration Register the new owner for taxes with the File a fiscal declaration confirming the acquisition municipal tax department of the property with the municipal tax department Local authority National authority Notary or lawyer Source: Doing Business database. REGISTERING PROPERTY 63 TABLE 6.1  Registering property in Bulgaria, Hungary and Romania—where is it easier and where is the land administration system more accessible and reliable? Distance to Cost Quality of land frontier score Procedures Time (% of property administration index City (Country) Rank (0–100) (number) (days) value) (0–30) Debrecen (Hungary) 1 81.16 4 8.5 5.0 26 Miskolc (Hungary) 2 80.92 4 10.5 5.0 26 Szekesfehervar (Hungary) 2 80.92 4 10.5 5.0 26 Gyor (Hungary) 4 80.80 4 11.5 5.0 26 Szeged (Hungary) 4 80.80 4 11.5 5.0 26 Budapest (Hungary) 6 80.08 4 17.5 5.0 26 Pecs (Hungary) 7 79.96 4 18.5 5.0 26 Oradea (Romania) 8 75.48 6 16 1.4 18 Brasov (Romania) 9 74.65 6 16 1.4 17 Bucharest (Romania) 9 74.65 6 16 1.4 17 Constanta (Romania) 9 74.65 6 16 1.4 17 Craiova (Romania) 9 74.65 6 16 1.4 17 Iasi (Romania) 9 74.65 6 16 1.4 17 Timisoara (Romania) 9 74.65 6 16 1.4 17 Ploiesti (Romania)a 15 74.64 6 16 1.4 17 Cluj-Napoca (Romania) 16 73.81 6 16 1.4 16 Ruse (Bulgaria) 17 71.53 8 11 2.6 20 Burgas (Bulgaria) 18 70.67 8 14 2.9 20 Pleven (Bulgaria) 19 70.44 8 11 3.3 20 Varna (Bulgaria) 20 70.19 8 11 3.4 20 Plovdiv (Bulgaria) 21 69.59 8 16 2.9 19 Sofia (Bulgaria) 22 69.23 8 19 2.9 19 Source: Doing Business database. Note: Rankings are based on the average distance to frontier score for the procedures, time and cost associated with registering property as well as for the quality of land administration index. The distance to frontier score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. a. While Ploiesti appears to have the same indicator data for registering property as six other Romanian cities, it has a lower ranking than those six (15 rather than 9) because its cost to register property is around RON 100 higher, a difference not reflected in the table because of the rounding of the cost data. though more than in Portugal (where it the Netherlands’, the highest among EU and the buyer obtains a copy of its cer- takes just 1 day) or Lithuania (3.5 days) member states. Bulgaria and Romania tificate of incorporation from the Court of (figure 6.2). Compared with the EU have among the lowest scores among EU Registration, nothing else is needed—the average, the process is also less costly member states—only Greece and Malta documents go straight to Foldhivatal for across the cities benchmarked in Bulgaria have lower ones. Among the main weak- registration. In Bulgaria, by contrast, the and Romania, though both countries nesses reflected by their scores is the lack municipality alone requires two separate require more procedures. In fact, Bulgaria of full geographic coverage of the land interactions for tax purposes, one before requires more procedures than all other registry and cadastre. and another after registration. In addition, EU member states except Belgium and the National Revenue Agency must issue France (which also require 8) and Greece What drives differences in a certificate attesting that there are no (which requires 10). efficiency? unpaid taxes and the Commercial Register In all three countries only two or three must certify the legal good standing of Hungary’s score on the quality of land interactions with the property register the buyer and seller.6 On average across administration index is only 3 points or cadastre are necessary to register the Bulgarian cities, entrepreneurs spend lower than Singapore’s, the highest glob- a property. In Hungary, once a lawyer as much time with other agencies as with ally, and 2.5 lower than Lithuania’s and signs the sale and purchase agreement the Property Register and GCCA. 64 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 6.2  Compared with EU averages, property registration is faster in all three countries—and less costly in Romania and Bulgaria EFFICIENCY OF PROPERTY REGISTRATION Procedures Time Cost (number) (days) (% of property value) Portugal, Sweden Slovak Republic 1 0 (EU and global best)*** 0 (EU and global best)* Portugal (EU and global best)** Poland Lithuania 2 5 Lithuania 1 Debrecen Lithuania, All 9 Romanian cities Slovak Republic 3 10 Miskolc, Szekesfehervar Pleven, Ruse, Varna Gyor, Szeged 2 Czech Republic 4 All 7 Hungarian cities 15 Burgas Slovak Republic Plovdiv, all 9 Romanian cities Ruse Budapest Pecs 3 Burgas, Plovdiv, Sofia EU average, Croatia 5 Greece 20 Sofia Pleven Varna EU average Poland 6 All 9 Romanian cities 25 Czech Republic 4 Czech Republic 7 30 EU average, Greece Croatia 5 All 7 Hungarian cities Poland France 8 All 6 Bulgarian cities 35 7 9 60 Croatia France, Portugal France Greece 10 70 8 QUALITY OF LAND ADMINISTRATION Index (0–30) 30 Singapore (global best) 29 Lithuania, Netherlands (EU best) 28 27 Slovak Republic 26 All 7 Hungarian cities 25 France 24 EU average 23 Croatia 22 Portugal 21 20 Burgas, Pleven, Ruse, Varna Poland 19 Plovdiv, Sofia 18 Oradea 17 7 Romanian cities 16 Cluj-Napoca Bulgarian city 5 Hungarian city Greece 0 Romanian city Source: Doing Business database. Note: The averages for the EU are based on economy-level data for the 28 EU member states. * Georgia and Norway also have one procedure. ** Georgia and New Zealand also have a process requiring one day. *** Georgia and Saudi Arabia also have a cost of 0.0% of the property value. REGISTERING PROPERTY 65 Among the six Bulgarian cities, registering FIGURE 6.3  A higher volume of property transactions is associated with longer delays a property is easiest in Ruse, where the in Bulgaria but not Hungary process is fast and inexpensive. In those where it takes more time, title registra- Time to register property (days) Average annual number of transactions (thousands) tion tends to account for the difference. 20 40 While this step typically takes 1–2 days in Bulgarian cities four of the cities, it takes 10 days in Sofia 15 30 and 4 in Plovdiv, exceeding the statu- tory time limit of 3 days. This variation is 10 20 driven in part by differences in both the type and volume of transactions. In Sofia the Property Register office receives a 5 10 large number of complex title registration requests.7 These take more time to pro- 0 0 cess because registry employees have to Ruse Pleven Varna Burgas Plovdiv Sofia do more due diligence, scan the notarized deeds and file a paper copy. This clogs up Time to register property (days) Average annual number of transactions (thousands) the queue, delaying other cases as well. 20 300 Moreover, while the Property Register Hungarian cities 250 offices in Burgas, Pleven and Ruse handle 15 around 10,000 property transactions a 200 year, the office in Sofia handles more than 10 150 35,000 and the one in Plovdiv more than 22,000 (figure 6.3). 100 5 50 Yet the number of transactions is not all that matters. In Varna, where there are 0 0 Debrecen Miskolc Szekesfehervar Gyor Szeged Budapest Pecs 16,000 a year, service delivery is as fast as in Pleven and Ruse. Varna’s Property Time Transactions Register office takes only 2 days to process the final registration of the prop- Sources: Doing Business database; Bulgaria, Property Register at the Registry Agency; Hungary, Department of Land Administration (Foldhivatal). erty. In Burgas, with one of the lowest Note: The number of property transactions for each city is the average number registered annually in the land book transaction volumes in the country, the of the local Property Register or land registry office in 2013–15. total time to register property is 3 days more than in Pleven, Ruse and Varna. The In Hungary the two land registries in The biggest share of the cost comes reason is that the municipality in Burgas Budapest handle 275,000 transactions from transfer fees charged by the NACLR requests a sketch of the estate (issued a year, more than in all six other cit- (0.8% of the property value) and notary by GCCA) before providing an evaluation ies combined. Yet they still manage to fees (0.6%). Small variations arise in of the property. In the other cities the process registrations faster than in Pecs, the cost of obtaining a fiscal certificate sketch and the evaluation are handled where the volume is only 5,000 a year. from the municipality. Brasov, Bucharest, simultaneously. Debrecen has the fastest process: the Craiova and Timisoara issue this certifi- local land registry office takes only 2–3 cate at no cost, while Ploiesti charges the In Romania the total time needed to days to make a ruling on a case under highest amount, RON 115. The cost varies register a property transfer is the same the expedited option, with postal delivery across Bulgaria, where the Local Taxes across all nine cities because of statutory taking another 3 days. and Fees Act allows municipalities to time limits set by the NACLR that are charge from 0.1% to 3% of the property uniformly enforced regardless of transac- Among the three countries, Hungary value in transfer taxes. Varna, with the tion volumes. Cadastral information, for has the highest cost to register property, highest cost among the Bulgarian cit- example, is provided within the 8-day consisting mainly of legal fees (1% of the ies benchmarked, levies the maximum legal time limit. Similarly, the act of reg- property value) and transfer taxes (4%) transfer tax rate allowed by law; Ruse istration takes 3 calendar days under the that apply uniformly across all locations charges 2.2%. Notary fees (0.3% of the expedited option—also within the legal (figure 6.4). Romania, with the lowest property value) and transfer fees (0.1%) time limit.8 cost, has no transfer tax or stamp duty. apply uniformly across the country. 66 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 6.4  With no transfer tax, Romania has the lowest property registration cost among the three countries All 9 Romanian cities 0.8 0.6 Varna 3.0 Pleven 2.9 Bulgaria average 0.1 0.3 2.6 Burgas, Plovdiv, Sofia 2.5 Ruse 2.2 All 7 Hungarian cities 0.02 1.0 4.0 0 1 2 3 4 5 6 Cost to register property (% of property value) Transfer fees Lawyer or notary fees Transfer tax or stamp duty Source: Doing Business database. Note: The average for Bulgaria is based on data for the cities benchmarked in that country. How does the quality of land Every piece of property, public or private, The Romanian cities also score partial administration vary? is formally registered and properly points on reliability of infrastructure. mapped. The registry division of the NACLR While the time, cost and procedural recently digitized the land records in complexity of property registration The Bulgarian cities get partial points on most cities. Among the benchmarked all matter for businesses, good land both reliability of infrastructure and geo- cities, Cluj-Napoca is the only one where administration goes beyond efficiency. It graphic coverage. Both registry and cadas- the majority of land records are still on ensures property owners a secure title, tre records have been scanned, though paper, with just 5% in digital format. backed by a reliable land administration scanned images cannot be electroni- But cadastral records in most of the system. Doing Business assesses the cally searched and updated (earning 6 of Romanian cities remain in paper format. quality of this system through five main 8 points on reliability of infrastructure). Exceptions are Cluj-Napoca and Oradea, dimensions: reliability of infrastructure The Property Register covers the country’s where the majority of cadastral records (0–8 points); geographic coverage entire territory, but the GCCA does not are scanned. The Romanian cities score (0–8); transparency of information (for 4 of 8 points on geographic coverage). no points on geographic coverage, with (0–6); land dispute resolution (0–8); and equal access to property rights (−2 to 0). Results for these dimensions are FIGURE 6.5  Reliability of infrastructure and geographic coverage set Hungarian cities then added for the overall score on the apart on the quality of land administration index quality of land administration index (for a possible 30 points). Hungary Bulgaria Romania 26 points (all 7 cities) 19 points (Plovdiv and Sofia) 16 points (Cluj-Napoca) 20 points (4 cities) 17 points (7 cities) The Hungarian cities are set apart from 18 points (Oradea) the rest by the reliability of infrastruc- Reliability of infrastructure ture and the geographic coverage of Geographic coverage Foldhivatal (figure 6.5). They score full points on both dimensions. The land Land dispute resolution records and cadastral maps are all in digital format. This enables seamless Transparency of information communications not only between the cadastre and land registry divisions of 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 Foldhivatal, but also with other govern- ment agencies and with private parties. Source: Doing Business database. REGISTERING PROPERTY 67 neither property records nor cadastral the NACLR would need to update its maps providing full coverage of privately WHAT CAN BE IMPROVED? infrastructure. held land. This chapter’s review of the efficiency Over the past 12 years 50 economies Making land-related information—such and quality of land administration in worldwide simplified property regis- as fee schedules, time limits for service Bulgaria, Hungary and Romania points tration and eliminated unnecessary delivery and statistics on transactions— to some possible improvements. Several requirements by linking systems across publicly available provides clients with apply to all three of the countries, others institutions. Denmark, Latvia and Portugal critical information on the transactions to one or two of them. were among them. When Latvian munici- they undertake and reduces mistakes palities gave the land registry access to and opportunities for bribery. The best Update local and national tax tax information, they freed entrepreneurs practice is for registries and cadastres information internally by linking operating in Riga from having to provide to make such information publicly avail- systems across institutions this information in paper format, sav- able either online or on a public board BULGARIA, ROMANIA ing them time and money. Bulgaria and at the agency. All nine cities in Romania Registering a property transfer in Bulgaria Romania could follow their example. obtain the full 6 points on transparency of requires personal interactions with the information—globally, only three econo- local office of the National Revenue Eliminate the requirement to mies other than Romania also score the Agency, to obtain a certificate attesting verify legal good standing with maximum points (the Netherlands, the that the seller has no unpaid taxes, and the commercial registry Russian Federation and Singapore). with the municipality, to obtain a tax valu- BULGARIA, HUNGARY ation of the property and to register the Before transferring a property title in Cities get fewer points on transparency of new owner for municipal taxes. Similar Bulgaria, the buyer and seller need information in Bulgaria (4) and Hungary interactions are required in Romania, to obtain certificates of good stand- (3.5) because they lack separate where the municipal tax department ing from the Commercial Register. mechanisms for filing complaints about issues a tax clearance certificate for the In Hungary Foldhivatal requires both problems arising with land records or seller before the transfer is processed parties to provide a company extract cadastral maps. In addition, there is no with the cadastre office and receives a (company data stored in the Court public commitment by the cadastre divi- fiscal declaration from the buyer after the of Registration) as well as specimen sions to deliver services within a certain transfer. signatures from their legal representa- time frame. Moreover, in Hungary official tives. These verifications ensure that the statistics tracking the number of transac- These separate interactions with each companies are registered and that those tions at the property registration agency agency are necessary because of a lack signing documents on their behalf are are not publicly available. of interconnectivity and data sharing. authorized to do so. In most countries Entrepreneurs in Bulgaria would not need the property deed suffices to engage Scores on land dispute resolution to obtain a tax clearance and tax valua- in a property transfer. Only three other are relatively even across cities in all tion from local and national tax agencies EU member states—Denmark, Italy and three countries (6.5 points for those in if the Property Register or GCCA could Poland—require parties to confirm their Hungary, 6 for those in Romania and most check tax information on properties legal status. In many countries there is in Bulgaria). Plovdiv and Sofia are the directly. Those in Romania would have no need for notaries to check the legal exceptions—they get 1 point less because no need to obtain a tax clearance before status of the parties because the prop- resolving a property dispute there takes title registration and complete a tax reg- erty registration system is linked to the two to three years, while it takes one to istration for the new owner afterward if company registration system. two years in all the other cities. the municipalities had access to NACLR records. Assess the feasibility of In 2016 Doing Business added questions to reducing property transfer taxes the quality of land administration index to The Romanian municipalities of BULGARIA, HUNGARY assess, in each economy, whether a per- Constanta and Timisoara have already Property transfer taxes are an important son’s gender has a bearing on access to constructed comprehensive taxpayer source of revenue for many governments. property rights. In Bulgaria, Hungary and databases and introduced online services But when transfer fees and taxes are too Romania as well as 171 other economies, for tax payments and fiscal declarations. burdensome, people may be encour- married and unmarried women have the Other cities could follow suit. They could aged to undervalue property. Hungary is same ownership rights to property as then link their taxpayer database with the among the 10 EU member states with the their male counterparts. NACLR.9 For the sharing to be reciprocal, highest cost to register property. Most of 68 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA the cost comes from the property trans- transaction. Bulgarian notaries charge In Romania neither the land registry fer tax, set at 4% of the property value. 0.3%, and Romanian notaries 0.6%. division nor the cadastre division of the NACLR covers the full territory. Only Over the past 10 years 52 economies In many countries companies can choose 23% of properties are registered—53% worldwide lowered transfer taxes and to transfer a property without the assis- of properties in urban areas and 16% other government fees related to proper- tance of legal professionals. They use a of those in rural areas.12 In April 2015, ty registration. In 2012 Ireland reduced its standardized contract obtained online or however, the Romanian government transfer tax from 6% of the property value from the registry. Standardized contracts approved the National Program for to 2%. Fifteen EU member states have reduce the potential for mistakes or Cadastre and Land Registration with the transfer taxes of 3.6% or lower, including irregularities, because the content that aim of completing the registration of real Romania and the Slovak Republic, which is critical for the land registry is manda- estate properties by 2023. levy no such tax. While all six Bulgarian tory. Offering such contracts would also cities have property transfer costs that reduce both the time and cost of registra- In Bulgaria the majority of properties are are lower than the EU average, Varna and tion. Companies could still resort to legal registered with the Property Register. The Pleven charge a higher property transfer consultation and tailor-made contracts, situation with cadastral maps is more tax than Sofia. especially for more complex cases—but complicated. Three different institutions by choice. Both Montenegro and the hold cadastral maps or cadastral plans, Revenue impact studies and tax simula- United Kingdom offer standardized con- in varying formats and covering differ- tions could be conducted to assess tracts to the public. ent areas. The GCCA covers only about whether the property transfer tax 18% of the territory. The Ministry of rate could be reduced in a way that is Doing Business data show that three of four Agriculture holds maps for about 70%, revenue-neutral or revenue-increasing. economies manage property registration mostly agricultural land. Municipalities Lower fees may broaden the collection without mandating the use of lawyers or also hold sizable collections of cadastral base for this tax. When the Egyptian notaries, including Denmark, Portugal and plans, mainly covering urban areas. The government lowered the registration tax Sweden. Indeed, Bulgaria, Hungary and municipal plans include utility maps as from 3% of the property value to a fixed Romania are among the fewer than 40 well as cadastral maps. The territory fee of about US$200, it recorded a 39% economies that require double verification covered by the GCCA often overlaps with increase in property registration revenue of property sale and purchase agree- what the municipalities cover. This can because of an increase in the number of ments—one by a lawyer or public notary create confusion and diminish the reliabil- registrations.10 Other countries have seen and one by the land registry. Portugal ity of information. A recently introduced similar results—including Greece, which successfully made notary involvement bill of law would allow all cadastral maps reduced its property transfer tax from optional for companies wishing to transfer now with the Ministry of Agriculture to 10% of the property value to 3%.11 property: parties need only sign the agree- fall under the responsibility of the GCCA, ment in person at the registry. As a result, increasing its territorial coverage to Introduce standardized contracts registering property in Lisbon takes only 88%. The GCCA could also take over the for property transfers and one procedure and one day. cadastral plans held by municipalities. consider making the use of To achieve the desired effect, however, lawyers or notaries optional Expand cadastral or property legislative changes are not enough. As BULGARIA, HUNGARY, ROMANIA registration coverage Hungary’s experience shows, necessary Companies completing a property trans- BULGARIA, ROMANIA upgrades in human resources and infor- fer in Bulgaria or Romania must have a Even a reliable and transparent land mation and communication technology notary countersign or authenticate their administration system has diminished infrastructure are equally important. sale and purchase agreement. Those usefulness if it covers only part of an in Hungary must have a lawyer do so. economy’s territory. Where land regis- Create an electronic platform for Companies also typically ask the notary tries and cadastres do not provide com- property transfers or lawyer to draft the sale and purchase plete geographic coverage, companies BULGARIA, HUNGARY, ROMANIA agreement. The requirement to use legal and individuals cannot be sure whether A nationwide electronic system allowing professionals for property transfers adds areas not covered might be relevant to all requirements for transferring property at least one procedure that takes one to their interests. Around the world only to be completed online would make carry- two days and imposes additional costs. 22% of economies have a registry with ing out land transactions easier as well as For the type of property in the Doing full coverage of private land—and only increase the security and transparency of Business case study, Hungarian lawyers 24% a cadastre with complete coverage. the process. It would also save resources charge on average 1% of the value of the Hungary is one of them. for businesses and governments alike. REGISTERING PROPERTY 69 Among the three countries, Hungary has its property records between 1997 and measures can be taken to improve the made the greatest advances toward such 2002 and subsequently introduced efficiency of the dispute settlement by a system, but transaction parties or their electronic registration. But by 2005 only making it possible to avoid having to go lawyer still need to visit a Foldhivatal about half of property transactions were to court. Some countries create funds to office in person to request registration. being submitted electronically. A final compensate parties that have suffered Foldhivatal has a functioning online push was needed. In 2008 electronic losses caused by mistakes in the property platform (TakarNet) where it offers infor- registration was made mandatory by registry, especially when those mistakes mation on properties, but this platform law. Today property registration can be cannot be corrected without affecting is not accessible to the general public. completed in just two steps, at a cost bona fide titleholders. Only authorized users such as lawyers, of 0.1% of the property value—and New banks and other financial institutions can Zealand tops the Doing Business ranking The United Kingdom has a statutory access it, for a fee. Eventually TakarNet on the ease of registering property. compensation scheme allowing claims could become a platform that supports to be made directly to the land registry. online registration and is open to all. Among EU member states, several Claims can be submitted for mistakes in have implemented online registration. the register or for such reasons as loss or In Bulgaria the core processes for prop- One of them is Denmark, where the destruction of records. If a claim is not erty registration are still paper-based. government began modernizing its land settled, the claimant has a reserved right Applications submitted to the Property registry more than two decades ago to seek remedies through the courts.14 Register are entered manually into an (box 6.2). Today electronic submission In Ireland claims for compensation electronic database. In Romania the of documents is mandatory for property can be filed directly with the Property digitization of land records and cadastral transfers. Transferring a property takes Registration Authority.15 Under the maps is still under way. The good news is only 4 days—down from 42 in 2003, Swedish Land Code the state will com- that the cadastre and land office divisions when the first Doing Business data were pensate a claimant for losses suffered of the NACLR have a common database. produced. because of a mistake by the property This could make online registration easier registry.16 to implement once all records have been Introduce mechanisms for dealing digitized.13 efficiently with land disputes Hungary has a compensation mechanism BULGARIA, ROMANIA to cover losses incurred by parties who Countries that have implemented a fully For cases in which a party to a property engaged in good faith in a property trans- electronic system did so progressively transaction suffers damage or loss due action based on erroneous information over several years. New Zealand digitized to an error by the property registry, certified by the property registry. Bulgaria BOX 6.2 Going electronic in property registration—an EU example of good practice from Denmark Denmark used to have a complex property registration system. At its core was an archive of around 80 million paper documents managed by local district courts that were not connected to one another. Completing a property transfer required working with thick, heavy land books in the local district court—a long and burdensome process for employees and customers alike. The Danish government recognized the need to modernize land administration, and in 1992 the Parliament amended the Land Registration Act to allow computerization—with the aim of speeding up the registration process and improving customer ser- vice. Between 1993 and 2000 the government scanned all records and computerized the country’s then 82 judicial district of- fices. While the records were being scanned, staff were being trained in how to work with the new registration system. In 2006, after the land records were fully digitized, work to develop a paperless registration system began. Another amendment to the Land Registration Act created the legal basis for implementing a digital land register, which was completed and operation- al by 2009. By 2011 Denmark required all applications to be submitted online, enabling more efficient screening of applications. Today, transferring a property in Denmark requires only three procedures, all of which can be completed online. Thanks to the online access to a single source of land registration data, citizens and businesses can transfer property on their own, with no involvement by third parties such as lawyers or notaries. They can also obtain information on any property. The Danish financial sector played a part: to facilitate access to credit as well as to information, it created a central hub allowing banks and the land registry to share land registration data. Note: This box is based mostly on information obtained from the portal of the Danish Registration Court (http://www.tinglysningsretten.dk) and the Doing Business database. 70 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA and Romania could follow suit by imple- tied up in the legal system. To monitor norms (secondary legislation) of the code. This is yet to be done because it requires the menting a similar mechanism. the land dispute resolution system, some agreement of several stakeholders, including countries carefully track land disputes municipalities, the Ministry of Public Finance, Publish annual statistics on and, at a minimum, publish the number of the Ministry of Regional Development and Public Administration, and the Association of completed transactions and land such disputes that have been presented Towns and Communes of Romania. disputes to the courts. This information not only 10. World Bank, Doing Business in Egypt 2008 BULGARIA, HUNGARY, ROMANIA helps to ensure transparency but also (Washington, DC: World Bank, 2007). 11. World Bank, Doing Business in 2015: Going All three countries publish information serves as a barometer for identifying gaps Beyond Efficiency (Washington, DC: World online on service requirements, fees in the reliability of the land registration Bank, 2015). and standards for property registration. system. Around the world 20 econo- 12. Data obtained from the NACLR. 13. The NACLR is currently rolling out a so-called Publishing annual statistics on the num- mies provide such statistics—including e-terra 3 electronic system, which is expected ber and type of transactions completed Finland, France, Georgia, Latvia and to gradually expand the number of property- by land registries and cadastres can fur- Turkey.18 related transactions (mostly internal at the beginning) to be performed electronically. ther bolster transparency. The Property These include mapping, application Register in Bulgaria and the NACLR in management, internal document management Romania publish such statistics and and property registration in land books. 14. United Kingdom, Land Registration Act refresh them several times a year.17 2002. For more details, see also section 4 Foldhivatal authorities in Hungary could NOTES (“Applications for Indemnity”) in “Practice do the same. Guide 39: Rectification and Indemnity,” Her 1. Stijn Claessens and Luc Laeven, “Financial Majesty’s Land Registry, last updated April 3, Development, Property Rights, and Growth,” 2017, https:/ /www.gov.uk/government Elsewhere, Lithuania’s land registry pub- Journal of Finance 58, no. 6 (2003): 2401–36. /publications/rectification-and-indemnity lishes performance statistics on its web- 2. Lithuania is at number 2 in the global ranking /practice-guide-39-rectification-and on the ease of registering property, Estonia -indemnity. site, while Norway’s statistical agency 15. Republic of Ireland, Registration of Title Act, at 6 and Latvia at 23. Among Central and publishes quarterly data on property and Eastern European countries, Georgia has a 1964. lease transfers by the type of transfer and global ranking of 3, the Slovak Republic 7 and 16. Swedish Land Code (SFS 1970:994), chapter Hungary 28. 19, section 37; and Real Property Formation property. Jordan’s Department of Land Act (1970:988), chapter 19, section 5. 3. World Bank, World Development Report 1989 and Survey publishes monthly data online (New York: Oxford University Press, 1989). Compensation for wrongful handling falls on the number of transactions completed. 4. Simon Johnson, John McMillan and under the Tort Liability Act (1972:207). Christopher Woodruff, “Property Rights and 17. The statistics are published on the official The United Kingdom’s land registry also websites of the Property Register in Bulgaria Finance,” American Economic Review 92, no. 5 publishes monthly data on transactions, (2002): 1335–56. (http://www.registryagency.bg/bg/registri providing information on the number 5. Property information held in cadastres and /imoten-registar/statistika/) and the NACLR land registries is part of the land information in Romania (http:/ /www.ancpi.ro/images and type of applications completed in /statistica_oct_2016.pdf). available to governments. Land information the previous month. Real estate firms also includes other geographic, environmental 18. Statistics are provided in France by Ministère and professionals use this information and socioeconomic data related to land de la Justice, http://www.justice.gouv.fr; in that are useful for urban planning and Georgia by the Supreme Court of Georgia, for forecasting purposes. Officials in the http://www.supremecourt.ge; and in Turkey by development. Republic of Korea estimate that enabling 6. Requesting certification of legal good standing the State Institute of Statistics, http://www users to view documents online rather is common practice in the due diligence .turkstat.gov.tr. than requiring that they visit an office to carried out by the buyer and seller. 7. Complex cases include those involving do so translates into significant cost sav- owners with accounts at the Property Register ings. Land registries with fully electronic that include multiple properties, multiple systems share information not only with mortgages or multiple property tax bills due. 8. Obtaining a municipal fiscal certificate takes citizens but also with other public and longer in Bucharest (four days) and in Brasov private institutions. Denmark’s central and Timisoara (two days) than in all six other hub enabling the land registry to share Romanian cities (one day). This difference is not reflected in the overall time to register land registration data with banks is one property because this step (procedure 2) can such example (see box 6.2). be completed simultaneously with the step of obtaining cadastral information from the NACLR (procedure 1). A step further would be to collect statis- 9. Romania’s latest national fiscal code, in tics on first-instance land disputes and effect since January 2016, establishes a make them publicly available. When land framework for allowing local authorities to issue electronically signed fiscal certificates. disputes occur, it is important to ensure To fully operationalize the new fiscal code and that they clear the courts quickly so that enable municipalities to issue electronically citizens’ resources are not perpetually signed official documents will require the adoption of the so-called methodological Enforcing Contracts MAIN FINDINGS ƒƒ Three Hungarian cities—Debrecen, Miskolc and Szekesfehervar—have more efficient contract enforcement as measured by Doing Business than Lithuania, the leader among member states of the European Union. ƒƒ Debrecen stands out thanks to a series of innovative court management measures informally called the “Debrecen Model,” a model that is readily replicable in other courts. ƒƒ In Bulgaria and Hungary enforcing a contract can take nearly twice as long in the city with the slowest courts as in the city with the fastest ones. ƒƒ Variations in scoring on the quality of judicial processes index emerge mostly in the availability of specialized commercial divisions of courts and in features of electronic case management systems. ƒƒ If the capitals of Bulgaria, Romania and Hungary had each attained the best performances found within their country, they would have ranked among the top 10 on the ease of enforcing contracts in Doing Business 2017—Sofia and Bucharest at 7 and Budapest at 3. 72 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA A n entrepreneur in Bulgaria who is court management, including the use of businesses find it difficult to make rea- brings a commercial case to case management software, adherence sonable assumptions in their dealings, court can expect to have it to deadlines and efficiency in internal particularly in contractual matters. The resolved and the judgment enforced in processing of cases. resulting unpredictability affects busi- just a year—except in Sofia. As one judge ness operations, dampens the business put it, “Sofia is another world.” While The time it takes to resolve commercial climate and mars perceptions of the judges in other Bulgarian cities take disputes matters—because efficient con- judicial system. only a few days to scrutinize complaints tract enforcement is essential to economic before ordering service on the defendant, development and sustained growth.1 in Sofia this step alone can take around Economies with a more efficient judiciary, HOW DOES CONTRACT three months. in which courts can effectively enforce ENFORCEMENT WORK IN contractual obligations, have more devel- BULGARIA, HUNGARY AND Bulgaria is not the only country where oped credit markets as well as a higher ROMANIA? court performance differs among cit- level of overall economic development.2 A ies. In Romania resolving a commercial stronger judiciary is also associated with According to Doing Business research, dispute in the courts takes 50% longer in more rapid growth of small firms.3 Overall, to enforce a commercial claim like the the city with the slowest courts than in enhancing the efficiency of the judicial one in the Doing Business case study, the city with the fastest ones. The differ- system can improve the business climate, entrepreneurs in Bulgaria must go to the ences are even more striking in Bulgaria foster innovation, attract foreign direct regional courts (районните съдилища), and Hungary, where it can take nearly investment and secure tax revenues.4 those in Hungary to the district courts twice as long in the slowest city as in the (járásbíróságok) and those in Romania to fastest one. By contrast, where legal institutions the first-instance courts (judecătorii).5 In are ineffective, changes to the law are all three countries judges scrutinize com- Within each of these countries the same likely to have limited impact. Moreover, plaints before ordering service of process, legal framework applies in all cities. Why where judicial practices and processes which is done by regular mail sent by the the variation in performance among within a country are inconsistent or vary court in Hungary and Romania and by them? What makes the biggest difference excessively from one location to another, court officers in Bulgaria. The trials are conducted through a series of hearings that are typically not consecutive but spread out. Once the evidentiary hearing WHAT DOES ENFORCING CONTRACTS MEASURE? is concluded, the judgment is handed down—and once the time for appeal has Doing Business measures the time and cost for resolving a commercial dispute expired without an appeal being filed, through a local first-instance court. The case study assumes that a seller deliv- the judgment can be enforced by private ers custom-made goods to a buyer who refuses delivery, alleging that the goods enforcement agents.6 are of inadequate quality. To enforce the sales agreement, the seller files a claim with a local court, which hears ar- What are the findings? guments on the merits of the case. Rankings are based on distance to On average, the cities benchmarked in Before a decision is reached in favor frontier scores for three indicators each of these three countries outperform of the seller, an expert is appointed Days to resolve Attorney, court and the average for member states of the to provide an opinion on the qual- commercial sale dispute enforcement costs as European Union on the efficiency of through the courts % of claim value ity of the goods in dispute, which contract enforcement. Indeed, the aver- distinguishes the case from simple age distance to frontier score for these debt enforcement. Doing Business 33.3% 33.3% cities in each country—77.34 in Hungary, also builds a quality of judicial pro- Time Cost 72.55 in Bulgaria and 71.65 in Romania— cesses index that measures wheth- 33.3% would earn a place among the top 25 er a location has adopted a series of Quality of judicial economies globally. Some cities do even processes good practices in its court system in index better. Speedy trials and low costs help four areas: court structure and pro- Debrecen, Miskolc and Szekesfehervar ceedings, case management, court Use of good practices promoting (all in Hungary) outperform Lithuania, automation and alternative dispute quality and efficiency the EU member state with the most effi- resolution (see figure). cient contract enforcement as measured by Doing Business.7 ENFORCING CONTRACTS 73 Among the 22 cities benchmarked, takes nearly 10 months, while in Brasov attorney fees and low up-front enforce- enforcing contracts is easiest in Debrecen, (Romania) it takes 23 months, about the ment costs as well as high scores on where costs are low (13.8% of the claim same as in Poland and the Slovak Republic. the quality of judicial processes index amount) and obtaining and enforcing Among EU member states, enforcing con- that reflect advanced electronic services a judgment takes just 11 months. It is tracts takes the least time in Luxembourg (e-filing and e-payment) and a well- most difficult in Brasov (Romania), as a and Sweden, just over 10 months. functioning case management system. result of delays in trial and enforcement Indeed, if Hungary (as represented by as well as relatively high expert fees and All seven cities benchmarked in Hungary Budapest) had achieved the best per- enforcement costs compared with those outperform the EU average on cost and formances observed among the seven in the other 21 cities (table 7.1). Most of the quality of judicial processes—and cities on time, cost and quality, it would the 22 cities outperform the EU average all but two on time. Debrecen has the have been number 3 in the ranking on on speed, cost and quality (figure 7.1). top ranking among all 22 cities, while the ease of enforcing contracts in Doing Budapest has the lowest among the Business 2017. Location matters: depending on where Hungarian cities and a ranking of 11 a business is located among the 22 among the 22. The difference is due The nine Romanian cities show the cities benchmarked, the time required mainly to the longer times for trial largest variation in performance. While for resolving a commercial dispute and and enforcement and the higher costs Timisoara and Constanta rank in the top enforcing the judgment can differ by of expert testimony in Budapest. All 10 among the 22 cities benchmarked, around 13 months. In Pleven (Bulgaria) it the Hungarian cities benefit from low Ploiesti and Brasov rank at the bottom. TABLE 7.1  Enforcing contracts in Bulgaria, Hungary and Romania—where is it easier? Distance to Quality of judicial frontier score Time Cost processes index City (Country) Rank (0–100) (days) (% of claim) (0–18) Debrecen (Hungary) 1 81.72 330 13.8 14.0 Miskolc (Hungary) 2 79.53 410 13.8 14.0 Szekesfehervar (Hungary) 3 79.12 425 13.8 14.0 Pecs (Hungary) 4 77.07 500 13.8 14.0 Timisoara (Romania) 5 76.13 455 19.6 14.0 Szeged (Hungary) 6 75.98 540 13.8 14.0 Ruse (Bulgaria) 7 75.38 321 19.0 11.5 Constanta (Romania) 8 75.04 495 19.6 14.0 Varna (Bulgaria) 9 74.23 395 16.7 11.5 Gyor (Hungary) 10 74.20 605 13.8 14.0 Budapest (Hungary) 11 73.75 605 15.0 14.0 Pleven (Bulgaria) 12 73.63 289 18.6 10.0 Craiova (Romania) 13 73.37 491 19.4 13.0 Cluj-Napoca (Romania) 14 73.34 527 21.8 14.0 Burgas (Bulgaria) 15 72.68 361 15.9 10.0 Iasi (Romania) 16 72.64 522 16.6 12.5 Plovdiv (Bulgaria) 17 72.36 440 18.4 11.5 Bucharest (Romania) 18 72.25 512 25.8 14.0 Oradea (Romania) 19 72.01 549 18.8 13.0 Sofia (Bulgaria) 20 67.04 564 18.6 10.5 Ploiesti (Romania) 21 65.86 653 20.2 11.5 Brasov (Romania) 22 64.24 689 21.9 11.5 Source: Doing Business database. Note: Rankings are based on the average distance to frontier score for the time and cost associated with enforcing a contract as well as for the quality of judicial processes index. The distance to frontier score is normalized to range from 0 to 100, with 100 representing the frontier of best practices (the higher the score, the better). For more details, see the chapter “About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania.” The data for Bucharest, Budapest and Sofia have been revised since the publication of Doing Business 2017. The complete data set can be found on the Doing Business website at http://www.doingbusiness.org. 74 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 7.1  Most of the cities in Bulgaria, Hungary and Romania outperform the EU average on speed, cost and quality for enforcing contracts Time Cost Quality of judicial processes index (days) (% of claim) (0–18) 0 0 18 17 150 Iceland (global best) 9 Singapore Luxembourg (EU best) 10 16 (global best) Australia (global best) 200 11 Croatia (EU best) 15 14 All 7 Hungarian cities, Bucharest, 12 Cluj-Napoca, Constanta, Timisoara 250 13 13 Craiova, Oradea Pleven Iasi Luxembourg, 300 14 6 Hungarian cities 12 Ruse, Debrecen EU average Brasov, Ploiesti, Plovdiv, Ruse, Varna Sweden (EU best) 11 15 Budapest Sofia 350 Burgas 16 Burgas 10 Burgas, Pleven Varna Iasi, Varna 400 17 9 Miskolc, Szekesfehervar Plovdiv 18 8 450 Timisoara Plovdiv, Pleven, Sofia 19 Oradea, Ruse 7 Craiova, Constanta Craiova, Constanta, Timisoara 500 Pecs 20 6 Bucharest, Iasi, Cluj-Napoca Ploiesti Szeged, Oradea 21 5 550 Cluj-Napoca, Brasov Sofia EU average 22 4 EU average 600 Budapest, Gyor 23 3 24 2 Bulgarian city 650 Ploiesti 25 1 Hungarian city Brasov Bucharest Romanian city 700 26 0 Source: Doing Business database. Note: The averages for the EU are based on economy-level data for the 28 EU member states. For practical reasons, the figure groups cities with similar times or costs in some cases. See table 7.1 for more precise data on the indicators. Overall, the majority of the Romanian represented by Sofia) had attained the In Bulgaria the review of the complaint cities have a below-average ranking, best performances among its six bench- that judges perform before ordering reflecting longer delays during the trial marked cities on time, cost and quality, it service of process takes 6–10 weeks stage and higher up-front enforcement too would have ranked among the top 10 in all cities except Sofia, where it takes costs. Nonetheless, if Romania (as rep- in Doing Business 2017. three months. Several factors undermine resented by Bucharest) had attained the performance at the Sofia Regional Court. best performances among the nine cities How do time measures vary? Human resources are one factor, but on time, cost and quality, it would also In all three countries a common delay in not the predominant cause of delay. have ranked among the top 10 in Doing filing and service stems from the need for The Sofia court carries a substantially Business 2017. a formal review of the complaint, espe- heavier caseload per judge than those in cially to correct mistakes in calculating the rest of the country, but not heavier The Bulgarian cities Ruse and Varna fees. While filing and service together than would be expected in an EU coun- belong to the group of 10 benchmarked take 40 days on average in the EU, this try’s capital city. A 2015 World Bank cities where it is easier to enforce a process takes nearly two weeks longer study identified a multitude of factors contract—and they earn scores on the on average in Hungary and three weeks that work together to compound delays. quality of judicial processes index that are longer in Bulgaria. Business processes in the Sofia court among the country’s highest, though low- are cumbersome and create bottlenecks er than those of counterparts in Hungary Among Hungarian cities, however, fil- in case processing, at this stage and and Romania. By contrast, Sofia has the ing and service take only 40 days in throughout the case flow. The physical worst performance in Bulgaria, with a Debrecen and Miskolc. Judges in these layout of the court buildings is not well ranking of 20 among the 22. A range of two cities appear to be strict in ensuring suited to case flow. The information and procedural bottlenecks slow the pace of that parties comply with requirements, communication technology infrastruc- dispute resolution in Sofia. In addition, and they are likely to reject complaints ture is fragmented, requiring clerks to judges there deal with heavy caseloads, that fall short. By contrast, filing and use different systems for different types and the court lacks a well-functioning service take up to 60 days in Budapest, of cases. And interacting with the court case management system. If Bulgaria (as Gyor, Szeged and Szekesfehervar. can be difficult, so that accessing the ENFORCING CONTRACTS 75 case file, for example, usually requires a The longest times for the trial phase reach a settlement before trial. This has personal visit to the court. But the Sofia can be found in the Romanian cities of led to an improvement in the quality of court has a staff-to-judge ratio slightly Brasov, Oradea and Ploiesti, at close to 13 the complaints presented. In an effort to above the average for regional courts in months. Among the nine Romanian cities ensure timeliness and prevent adjourn- Bulgarian district towns, so there may be benchmarked, Brasov and Ploiesti have the ments, judges in Debrecen also report opportunities for reducing delay by mak- most cases per judge after Bucharest10—in being more likely to impose penalties ing smarter use of existing staff.8 Brasov in part because not all judges’ posi- on expert witnesses who are tardy in tions are filled, which adds to the caseloads presenting their testimony—a reduction In Romania courts in Oradea, Constanta of the other judges. Just to schedule the of 1% of expert fees for every day of delay. and Timisoara take just over a month to first hearing for a case in these two cit- review complaints. Judges report that ies can take 2.5–4 months. In Timisoara These practices applied in Debrecen are they rarely have to ask litigants to amend (Romania) the trial phase takes less than 10 provided for by national law and are not them. Meanwhile, in Ploiesti the same months thanks in part to lighter caseloads novel to court management globally. The process takes nearly three months, with allowing a faster calendar of hearings. difference seems to be that the Debrecen many complaints sent back for revision, court takes a strict approach to imple- most frequently because the plaintiff The Hungarian city with the fastest time menting the procedural laws available to miscalculated the filing fee. for the trial and judgment phase on it, to ensure proactive case management. average owes that speed to a series of This suggests that any court in Hungary— In some instances, such as in Craiova proactive court management measures and likely elsewhere—could apply such (Romania) and Sofia (Bulgaria), litigants informally called the “Debrecen Model.” measures to improve its own performance. tend to leave the calculation of the filing In the Debrecen District Court the trial fee to the judge so as to avoid making mis- and judgment phase typically takes just Another difference in Debrecen is that takes. In Sofia this compounds delays by under 7 months. Judges in Debrecen tend hearings are scheduled three days a week imposing even more steps on an already to strictly scrutinize initial complaints, rather than only two days, as in most of burdened court, and backlogs make it dif- rejecting outright those that have errors the other Hungarian cities. This likely ficult to provide a prompt response to the or that fail to show good-faith efforts to also improves timeliness and encourages plaintiff on the correct filing fee. FIGURE 7.2  Despite similarly light caseloads, the regional court in Plovdiv takes 53% Often courts that have few cases can more time than the one in Ruse to resolve a civil case resolve those cases faster, but this is not always so. Two Bulgarian cities, Pleven Time (days) Civil cases per judge, 2015 and Ruse, have the fastest trial times 500 120 among the 22 cities benchmarked, at just 450 over four months.9 Courts in these cities 100 have very light caseloads—around 50 400 civil cases per judge in 2015—allowing 350 them to adhere to deadlines and resolve 80 cases quickly. But light workloads do not 300 always mean fast results. Plovdiv has a 250 60 caseload (53.83 civil cases per judge) 200 just as light as that in Ruse (53.16), but 40 its time from filing to judgment is 53% 150 slower. Similarly, Varna has a caseload 100 20 (48.88 civil cases per judge) much like 50 that in Pleven (44.68) but a time that is 54% slower. Nonetheless, the Sofia 0 0 Regional Court is clearly a special case. Sofia Plovdiv Varna Burgas Ruse Pleven Its judges carry 85–130% more cases Time for filing and service Time for trial and judgment Civil cases per judge than those in the regional courts of the other five cities benchmarked in Bulgaria, Sources: Doing Business database; Supreme Judicial Council of Bulgaria, “Civil Caseload Data per Judge for 2015,” and reaching a judgment in that court appendix 83 in Summarized Statistic Tables for Court Activities for the Year 2015, available at http://www.vss.justice .bg/page/view/1082. takes 11 months (figure 7.2). Note: The caseload data refer to cases per approved judge’s position in each regional court in 2015. Caseload data taking into account the number of positions actually filled were unavailable for civil cases only. 76 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA effective time management among judg- FIGURE 7.3  Only 5 of the 22 cities match or surpass the EU average on the time for es, staff and litigants. enforcement of judgments Debrecen Meanwhile, in Budapest, Gyor and Pecs Pecs the trial and judgment phase typically Bucharest takes a year. In Budapest judges handle Miskolc a larger number of commercial cases, Szekesfehervar EU average and judges and lawyers mention that Pleven the cases tend to be more complex. In Sofia Gyor judges report that proximity to the Timisoara border can make it more likely for cases Varna Hungary average with international implications to be filed. Oradea Among the Hungarian cities with slower Constanta trials, judges point to heavy caseloads, a Ruse higher complexity of cases, a shortage of Bulgaria average experts to provide testimony and delays Craiova Romania average in receiving their testimony. Court delays Iasi are exacerbated by the lack of a system to Plovdiv easily reassign judges to temporarily fill in Ploiesti for those with extended absences. Cluj-Napoca Burgas Budapest When it comes to enforcement of the Gyor judgment, only 5 of the 22 cities match Szeged or surpass the EU average for time (figure Brasov 7.3). Enforcement takes roughly the same 0 50 100 150 200 time on average across Bulgaria, Hungary Time for enforcement (days) and Romania. But a different picture Bulgarian city Hungarian city Romanian city emerges at the city level. In Hungary Source: Doing Business database. enforcing a judgment takes about twice Note: The averages for Bulgaria, Hungary and Romania are based on data for the cities benchmarked in each as long in Budapest, Gyor and Szeged country. The average for the EU is based on economy-level data for the 28 EU member states. as in Debrecen and Pecs, where it takes only three months. One of the main with the national tax authority allowing than the EU average of 13% of the claim delays is obtaining an enforceable copy bailiffs to access its asset database for a fee. amount. Attorney fees tend to vary across of the judgment, having the application But the national tax authority does not have cities because they are based on market for enforcement granted and then having access to local tax information. The bailiffs rates. In Hungary, however, where lawyers the enforcement order sent by the court in some Romanian cities have therefore tend to practice in more than one city to the bailiff. Creditors in Hungary do not reached agreements with individual city thanks to geographic proximity coupled choose the bailiff who will enforce their halls to access their databases, such as in with good road connections, there are claim; instead, the court designates a Brasov and Iasi. no noticeable variations in attorney fees. bailiff according to criteria that include With the exception of Oradea, Romanian the address of the debtor. Similar time What are the main drivers of cost? cities also show little variation in attorney differences occur in Romania, where The cost to enforce a contract is lowest in costs. In Iasi these costs amount to 5% enforcing a judgment takes half as much Hungary, at 14% of the claim amount on of the claim amount, and in Bucharest to time in Bucharest as in Brasov. average, and highest in Romania, at 20.4%. 7.7%. In Oradea, however, they rise to 9%, Indeed, the cost in Hungary is among the a level that local lawyers claim is driven by A common complaint in all three countries lowest in the EU thanks to low attorney the smaller number of practicing attorneys is the difficulty of locating suitable assets to fees and low up-front enforcement costs. In in the city and the absence of a larger mar- seize for enforcement. Company registries Romania high enforcement costs stand out. ket nearby that could serve it. often have outdated addresses for compa- nies, which makes it harder to find assets Attorney fees as a share of income per In Bulgaria there is a minimum that for seizure. Moreover, access to other data- capita are nearly twice as high in Bulgaria attorneys can charge, but above that bases can prove difficult. In Romania the as in Hungary on average.11 Still, even in they can negotiate with their client.12 For Association of Bailiffs has an agreement Bulgaria the fees are significantly lower a commercial case with a claim amount ENFORCING CONTRACTS 77 of twice the income per capita (as in the typically amount to 1–2% of the claim, filing set by national regulation in each country Doing Business case study), attorneys fees make court costs in these countries and therefore does not vary among cit- report charging above the floor. Attorney comparatively higher than the EU average ies—and to cover their expenses through costs are higher in Pleven, Plovdiv and of 4.8% of the claim. the proceeds of the public sale. Ruse, at 10.4% of the claim amount. Among the other Bulgarian cities, they Romania has the highest average cost What judicial good practices are are lowest in Burgas, at 7.1% of the claim to enforce a judgment among the three used? amount. Attorneys in Burgas suggest countries—at twice the cost in Bulgaria Hungary has adopted the most judicial that fees are most likely lower there and three times that in Hungary. In good practices as captured by the qual- because of the larger legal market and Romania bailiffs often request advances ity of judicial processes index, followed the downturn it suffered along with local to cover their expenses in seizing and closely by Romania. Hungary’s average companies during the financial crisis. selling debtors’ movable assets. Apart score on the index is 14.0, and Romania’s from these advances, the biggest expense 13.1—both exceeding the EU average Together with attorney fees, expenses is paying for the asset valuator and the of 11.3. Bulgaria’s average score of 10.8 incurred during trial are the biggest drivers organization of the auction. The costs mainly reflects the lack of specialized of cost, though they do not account for sig- of these items, which are not regulated, commercial departments in the regional nificant differences within countries (figure can vary widely in Romania. In Bucharest, courts in some cities,13 the lack of a spe- 7.4). Filing fees, which are calculated on the for example, despite one of the fastest cialized small claims court or fast-track basis of the value of the claim, can range enforcement times among the 22 bench- procedure as well as limitations on the from 3.7% of the claim in Romania and 4% marked cities, organizing an auction can matters that can be handled by arbitration. in Bulgaria to 6% in Hungary. Filing fees cost three times as much as in Oradea. In do not vary from city to city within these Bulgaria and Hungary the more common The scoring on judicial good practices in countries because they are nationally regu- practice is for bailiffs to receive only the Hungary shows no differences among cit- lated. Together with the expert fees, which regulated up-front payment—which is ies (figure 7.5). In Bulgaria and Romania, FIGURE 7.4  Together with attorney fees, expenses incurred during trial are the biggest drivers of cost in enforcing a contract Hungary Bulgaria Romania average average average 14.0% 17.9% 20.4% Debrecen (Hungary) Gyor (Hungary) Miskolc (Hungary) Attorney fees Pecs (Hungary) Court costs Szeged (Hungary) Szekesfehervar (Hungary) Enforcement costs Budapest (Hungary) Burgas (Bulgaria) Iasi (Romania) Varna (Bulgaria) Plovdiv (Bulgaria) Pleven (Bulgaria) Sofia (Bulgaria) Oradea (Romania) Ruse (Bulgaria) Craiova (Romania) Constanta (Romania) Timisoara (Romania) Ploiesti (Romania) Cluj-Napoca (Romania) Brasov (Romania) EU average Bucharest (Romania) 0 5 10 15 20 25 30 Cost to enforce a contract (% of claim) Source: Doing Business database. Note: The averages for Bulgaria, Hungary and Romania are based on data for the cities benchmarked in each country. The average for the EU is based on economy-level data for the 28 EU member states. 78 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 7.5  Some differences in judicial good practices emerge among cities in Bulgaria and Romania, but not among those in Hungary Court structure and Case Court Alternative proceedings management automation dispute resolution Specialized commercial court Legal limits on adjournments Legal time standards for key Electronic payment of court Electronic CMS features for Electronic CMS features for Small claims court or fast- Limitations on arbitration Electronic publication of Regulation of voluntary Financial incentives for commercial arbitration Consolidated law for Enforcement of valid Voluntary mediation Performance reports Pretrial attachment Pretrial conference arbitration clauses Randomized case Electronic service track procedure Electronic filing assignment judgments or division mediation mediation attorneys matters judges events fees Burgas ● ● ● º ● ● ● ● ● ● ● ● ● Pleven ● ● ● º ● ● ● ● ● ● ● ● ● Bulgaria Plovdiv ● ● ● ● º ● ● ● ● ● ● ● ● ● Ruse ● ● ● ● º ● ● ● ● ● ● ● ● ● Sofia ● ● ● ● º ● ● ● ● ● ● ● ● Varna ● ● ● ● º ● ● ● ● ● ● ● ● ● Budapest ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Debrecen ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Gyor ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Hungary º º Miskolc ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Pecs ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Szeged ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Szekesfehervar ● ● ● º ● ● ● ● ● ● º ● ● ● ● ● ● Brasov ● ● ● ● ● ● ● ● ● ● ● ● ● ● Bucharest ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Cluj-Napoca ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Constanta ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Romania Craiova ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Iasi ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Oradea ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Ploiesti ● ● ● ● ● ● ● ● ● ● ● ● ● ● Timisoara ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Full points º Partial points Source: Doing Business database. Note: The figure shows which locations have adopted the judicial good practices captured by the quality of judicial processes index. For more details, see the data notes. CMS = case management system. by contrast, differences emerge in the having the same software. Hungary’s documents, such as templates to be availability of specialized commercial Integrated Judicial Information System used in trials. courts or divisions and in the features of (BIIR) allows judges not only to keep electronic case management systems. track of their cases but also to send In Bulgaria different courts use different In Romania all cities except Brasov, Iasi notifications to lawyers. Romania’s software systems: the system used in and Ploiesti have specialized commercial Electronic Court Record Information Sofia’s courts has fewer features than divisions in the form of tribunals that System (ECRIS) offers substantially those used in the regional courts in the hear commercial cases with claims of more features for judges than for liti- other benchmarked cities. The various RON 200,000 or above. In Bulgaria, gants. Some cities have started their software systems used in those regional Burgas and Pleven lack specialized com- own initiatives to improve litigants’ courts allow judges to view their hearing mercial divisions, while in the other cities access to case documents. In Cluj- schedule, manage case documents and the regional courts have judges that hear Napoca and Timisoara, for example, the access laws and regulations. In Sofia only commercial cases. courts have developed the “Infodosar” some judges use Microsoft Excel to software for this purpose. Other cities, complement their existing system, which Hungary and Romania both have an such as Iasi, have taken advantage of does not have all documents uploaded electronic case management system the Ministry of Justice portal (portal and does not allow judges to work on all that is mostly unified, with all courts .just.ro) allowing courts to upload stages of the process. ENFORCING CONTRACTS 79 issues in dispute and advancing the beforehand to the parties.16 The district WHAT CAN BE IMPROVED? negotiations of the parties toward a courts of Western Australia actively settlement. Key elements for an effec- manage cases with a view to settling This chapter’s review of the process of tive pretrial conference include allowing them in the pretrial phase. The aim is enforcing contracts in Bulgaria, Hungary the judge to have early and continuous to have civil cases resolved within 12 and Romania points to several areas of control over the progress of the case; months and to have only 2–3 out of 100 possible improvement. developing a realistic, meaningful and go to trial.17 The pretrial conference phase binding case timeline; and promoting is also a key element of the Norwegian Actively manage the pretrial early settlement of the case while limit- court system, renowned for its active phase ing the scope of the trial.15 case management (box 7.1). BULGARIA, HUNGARY, ROMANIA Initially developed in the United States Bulgarian judges seeking examples of Beyond introducing pretrial confer- in the 1930s, the practice of using the practice need not look only abroad. ences, courts in Bulgaria, Hungary and pretrial conferences as a case manage- Judges handling fast-track priority cases Romania could consider undertaking ment technique has spread throughout such as labor disputes or tenants’ rights a thorough analysis of their business Europe, including to 11 EU member cases hold pretrial conferences. But this processes during the phase from filing states.14 It has not spread to Hungary procedure has not yet been extended to to first hearing—such as the processes and Romania, however, and is used in other types of cases. for receiving claims, scheduling hear- only certain types of cases in Bulgaria. ings, serving process and ensuring the Judges in these countries do not use In the Finnish Rovaniemi Court of Appeal presence of witnesses, including expert pretrial conferences for commercial the practice is to tailor a program for witnesses. Identifying ways to simplify cases, though this practice can lead to each case and provide directions to the and streamline these processes could more efficient trials. Held after a case parties on the estimated time frame for help increase the predictability of is filed, these informal meetings are the pretrial phase, pretrial hearings and hearings, ensure readiness for trial and aimed at clarifying and narrowing the trial. Detailed hearing timetables are sent reduce delays. BOX 7.1 A holistic approach to case management in the Norwegian courts Norway completely revamped its civil procedure in 2008. It introduced a holistic model restricting civil cases to one main hear- ing, emphasizing the role of preparatory pretrial conferences and strictly limiting the number of adjournments in a case.a Good case management practices like these can help reduce the caseload burden on courts and speed up the delivery of justice. After the Midhordland District Court in Norway introduced preparatory meetings in civil cases, more than 80% of these cases ended in a settlement rather than going to trial.b The Nedre Romerike District Court has also successfully implemented pretrial conference techniques. Judges schedule meetings shortly after a case is filed, allowing lawyers to attend in person or by phone. The judge and the parties plan the steps in the case and clarify the claims and main supportive arguments. They also discuss the evidence the parties plan to offer, set deadlines and establish the dates and number of days needed for the main hearing. Hearing dates are set in accordance with general time standards allowing six months for ordinary civil cases and three months for small claims. The court also follows a restrictive ap- proach to adjournments. If the lawyer for a case is unavailable, the administrators push for its transfer to another lawyer at the same firm. Adjournments are rarely granted and usually limited to illness documented by a doctor’s certificate.c Judicial discretion is a central feature of the Norwegian system. Judges tailor the proceedings and guide the parties by identifying disputes and undisputed facts. They have a duty to promote early settlement of disputes. They also assess whether mediation is appropriate for a case, and can refer cases for court-annexed mediation, which became available for all civil cases in 2008.d a. CEPEJ (European Commission for the Efficiency of Justice), “Reports on the Implementation of the CEPEJ Guidelines for Judicial Time Management in 7 Pilot Courts/Institutions (from Czech Republic, Georgia, Italy, Norway, Switzerland, United Kingdom)” (CEPEJ, Strasbourg, 2011). b. CEPEJ, “Compendium of ‘Best Practices’ on Time Management of Judicial Proceedings” (CEPEJ, Strasbourg, 2006). c. CEPEJ, “Reports on the Implementation of the CEPEJ Guidelines for Judicial Time Management in 7 Pilot Courts/Institutions (from Czech Republic, Georgia, Italy, Norway, Switzerland, United Kingdom)” (CEPEJ, Strasbourg, 2011). d. Laura Ervo and Anna Nylund, eds., Current Trends in Preparatory Proceedings: A Comparative Study of Nordic and Former Communist Countries (Cham, Switzerland: Springer International, 2016). 80 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Set legal limits to the granting and median number for each type of case The U.S. state of Virginia provides an of adjournments as well as the reasons for adjournments. online calculator for its circuit courts. BULGARIA, HUNGARY, ROMANIA Court management can then take steps Litigants specify the court in which they An integral part of good case manage- to reduce the number of adjournments will present their complaint, the type ment is establishing, in consultation with over time and tackle the most common of case, the amount of the claim and the parties, a clear, reasonable and real- reasons for them. Simply introducing whether they will need sheriff services. istic timeline for a case as well as clear this monitoring practice can help instill The website then displays the filing fee.22 rules limiting the use of adjournments. a culture of predictability for hearings, Serbia introduced online fee calculators Without rules to enforce timelines, they improving timeliness and reducing the for selected courts, such as the Leskovac quickly become meaningless. In 1984 the frustrations experienced by judges, court Basic Court and, for certain types of Committee of Ministers of the Council staff and court users alike. cases, the Novi Sad Basic Court.23 of Europe advised against having more than two hearings (preparatory and Simplify the calculation and Make judgments at all levels trial hearings). It also recommended review of court fees available online that no adjournment should be granted BULGARIA, HUNGARY, ROMANIA HUNGARY, ROMANIA save when “new facts appear or in Judges in Bulgaria, Hungary and Romania Publishing judgments strengthens the other exceptional and important circum- conduct a formal review of an initial judiciary by enhancing transparency and stances.”18 Only eight EU member states complaint before declaring it admissible public trust. It is also vital for a strong impose limitations on adjournments and ordering that it be served on the investment climate. Disseminating infor- that are respected in practice.19 All of defendant. Judges in some cities also mation on the outcome of commercial them—including Bulgaria—focus on report that a large number of complaints cases—especially on the courts’ inter- limiting the adjournments to unforeseen must be revised because of errors, most pretation and application of laws—helps and exceptional circumstances rather commonly in the calculation of court create predictability, strengthening inves- than on limiting the total number that fees. The cost represented by the time tors’ confidence on how regulations will can be granted.20 Hungary and Romania judges spend in revising the calculation, affect their business dealings. A study impose neither of these types of limits on and litigants in correcting the filing fee, in the Commonwealth of Independent adjournments. can end up exceeding the fee itself. The States shows that publishing court deci- calculation errors can also lead to delays sions helps build legal certainty.24 In the Slovak Republic the Bratislava in the court proceedings. District Court is obligated to decide a In Bulgaria the publication of judgments case on the first hearing; adjournments Several steps could be taken to mitigate is enshrined in the Judiciary Systems Act are allowed only for serious reasons that this drain on court resources. One is to (article 64), and judgments are available are put on the record. In Latvia the Riga revise fee schedules to make the fees through the webpage of the Supreme Central Court cannot postpone a hearing simpler to calculate. Bulgaria has set Judicial Council (http://legalacts.justice without first setting a new hearing date. court fees at 4% of the claim amount, .bg/). But Bulgaria could improve this In the Swiss judicial district of Dorneck- and Hungary at 6%. But in Romania a online repository by reducing delays in Thierstein extensions are generally sliding scale makes the calculation more publishing decisions and enhancing the granted no more than twice.21 challenging. For example, for a claim search function. valued at RON 65,000, the fee would In parallel with setting limits on adjourn- amount to RON 2,023 plus 2% of the In Romania the most important judg- ments, it is also important to review amount by which the value exceeds ments of the High Court of Cassation and judicial capacity, case management and RON 38,790. Justice are available online (http://www infrastructure issues. Judges burdened by .scj.ro/). In addition, the Superior Council a large volume of cases may be inclined Another possible measure is to have trained of Magistracy has been working with to grant adjournments; in the absence of court clerks rather than judges review initial the Bar Association to develop an online effective management techniques or an complaints to verify that they meet the database (ROLII) for judicial decisions at automated case management system, formal requirements and reflect the correct all levels. Work is currently focused on for example, adjournments may seem court fees. In addition, courts could make a removing identifying information from an attractive method for managing their fee calculator available online. This could (or “anonymizing”) decisions so that they caseload. increase accuracy in calculating court fees, can be made available online. An initial help litigants predict their litigation costs aim was to have 2 million anonymized Thus in addressing the issue of adjourn- and free up time for judges to devote to judgments online by the end of 2016, ments, courts should monitor the average more substantive tasks. with the ultimate goal being to create a ENFORCING CONTRACTS 81 repository of 20 million judgments at all all tribunals soon after and in all courts fast-track procedures. Simpler processes levels going back to 2007.25 of appeal in 2015. To increase take-up, and more relaxed rules lower costs for some jurisdictions introduce incentives. claimants, who may be able to file and In Hungary cases of broad relevance are In the United Kingdom the Money Claim present their own case before the court typically published online after being Online Service offers a lower filing fee for without legal representation. In addition, anonymized, though sometimes only a claim submitted online.28 since there is less work involved for the excerpts of these cases are published. courts, filing fees can be lower and judges Along with electronic filing, electronic can issue decisions more quickly. Introduce electronic filing and payment is central to a full-fledged case improve electronic payments management system. The court systems In Bulgaria, where there are no small BULGARIA, ROMANIA of Bulgaria, Hungary and Romania all claims courts, a simple case of Submitting court documents electroni- have the technical capacity to receive EUR 1,000 would follow the same proce- cally makes them readily available to be e-payments for court fees. But Hungary’s dure as a complex case of EUR 1 million. processed, shared and stored. This saves system has the most advanced capacity, Not surprisingly, an EU poll surveying EU time and effort both for those submitting with a dedicated platform that automati- citizens about disputes with a retailer, the documents and for the court staff and cally links payments to the corresponding provider or business transaction partner users. Among the judicial good practices complaint. found that Bulgarian consumers were recorded by Doing Business, e-filing is the least willing to take a business to among the least common, implemented In Romania payment can be made by court over a dispute involving less than in only 28 of 190 economies around electronic bank transfer to the city EUR 2,000—with only 31% saying that the world. Implementing e-filing is not treasury’s bank account. Fearing fraud, they would file suit.29 easy, because it requires first putting in however, many judges refuse to accept place authorizing legislation as well as a printout of the transfer confirmation. There is no universal definition of small authentication systems and information Instead, they request a receipt that has claims courts or procedures. EU member technology capacities on both the court been physically stamped at a branch of states seeking to provide efficient solu- and the user side.26 the bank, to ensure that the same receipt tions for dealing with small claims use cannot be used as proof of payment in different approaches. Most use simplified Hungary has successfully introduced more than one case. small claims procedures within their reg- electronic filing since 2015, making its ular court system; only Greece and Malta use mandatory for commercial cases Courts in both Bulgaria and Romania have small claims courts. Thresholds can between legal persons since July 1, 2016. have difficulty tracking the payment of range from up to EUR 1,000 in Germany In the second half of 2016, 40.57% of civil filing fees for cases, because the pay- and Croatia to none at all in the United cases were submitted electronically.27 ments are not always correctly identified. Kingdom, where cases are assessed on Lawyers in Hungary use the Perkapu sys- Simply noting the case number on the the basis of their complexity.30 tem, which is based on the existing ÁNYK transfer request would help prevent the platform, to communicate securely with same receipt from being used more than Use case data assessments with the court. After submitting a complaint once. Ultimately, a dedicated platform a view to rebalancing workloads they receive an official acknowledgment that automatically links fee payments BULGARIA, ROMANIA from the system, also electronically. and cases would allow courts to keep After a commercial case has been filed track of payments. in a Bulgarian court, the first trial hearing Implementing a fully electronic system typically takes place one to three months for document submission takes time, Introduce small claims court later—except in Sofia, where lawyers indi- so the earlier a country starts the bet- or simplified small claims cate that the wait is at least five months ter. Italy introduced e-filing in stages. procedures and often much longer. Congestion in From 2005 until 2009 the system was BULGARIA the courts of larger Bulgarian cities, piloted only for money claims in 5 of Resolving a commercial dispute can be especially Sofia, is a well-known issue. 165 tribunals and courts of appeal. costly and time-consuming for small and The European Commission has repeat- Legislation was then updated to expand micro businesses. One way to help is to edly identified uneven caseloads as an the system. Filing through the Electronic introduce small claims courts or small important concern in Bulgaria, especially Civil Trial Online System (Processo Civile claims procedures. These help expedite in the discussion of staff allocation to Telematico, or PCT) became manda- the resolution of minor disputes of different courts.31 A 2015 World Bank tory for injunctions and pleadings in new relatively low value by setting aside many study recommended a reorganization of civil cases in 2014, for all pleadings at legal formalities and using simplified or the judiciary to improve its efficiency and 82 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA effectiveness based on an assessment of /en/784131468184735141/Mapping-the NOTES -way-through-court-procedures-in-Bulgaria. judicial workloads. The study identified 13 9. Counted from the moment the complaint is district courts with 10 or fewer cases per 1. Gianluca Esposito, Sergi Lanau and successfully served on the defendant until the judge per month and 6 regional courts time to appeal a first-instance judgment has Sebastiaan Pompe, “Judicial System Reform expired. with 20 or fewer, well below the national in Italy: A Key to Growth,” IMF Working 10. Romanian Superior Council of Magistracy, Paper 14/32 (International Monetary Fund, average of 30.32 Washington, DC, 2014); Maria Dakolias, Rapoarte privind starea justiţiei (Report on the Status of Justice for the Year 2015), annex I, Court Performance around the World: A http://www.csm1909.ro. The European Commission has also Comparative Perspective, World Bank Technical 11. In absolute terms, attorney fees across the Paper 430 (Washington, DC: World Bank, noted a need for Romania to address 1999); Gwendolyn G. Ball and Jay P. Kesan, three countries are relatively similar, ranging uneven workloads between courts. on average from EUR 963 in Romania to “Judges, Courts and Economic Development: EUR 1,062 in Bulgaria. Concurrent studies by the World Bank, The Impact of Judicial Human Capital on 12. Article 36 of the Attorney Act establishes the Efficiency and Accuracy of the Court undertaken in 2013 and 2014, provided System” (paper presented at the 15th Annual the right to remuneration for attorneys. The recommendations on workload distribu- amount of the remuneration may not be Conference of the International Society lower than that envisaged by the Supreme tion.33 On the basis of all this information, for New Institutional Economics, Stanford Bar Council, in Ordinance 1 of the Supreme University, Stanford, CA, June 16–18, 2010), the judicial management in Romania http:/ /papers.isnie.org/paper/716.html; Bar Council amending the minimum tariffs has already started work. It defined the for attorneys, adopted with State Gazette 84, Daniel Klerman, “Legal Infrastructure, Judicial October 24, 2016. “Strategy for the Development of the Independence, and Economic Development,” 13. Judges in the civil and commercial Law and Economics Working Paper Series Judiciary 2015–2020” and an action plan (University of Southern California Law School, departments of the Burgas and Pleven District in April 2016, which will be implemented Courts do not specialize in hearing solely Los Angeles, 2006); Kenneth W. Dam, “The commercial cases. with EU funding and World Bank loans. Judiciary and Economic Development,” John 14. Doing Business database. These countries M. Olin Law & Economics Working Paper 287, The action plan includes the redistribu- Second Series (University of Chicago Law are Austria, Croatia, the Czech Republic, tion of judges, prosecutors and clerks in Denmark, Finland, Latvia, Lithuania, Portugal, School, Chicago, 2006); Virginia Rosales- Spain, Sweden and the United Kingdom. accordance with an analysis of human López, “Economics of Court Performance: An 15. Heike Gramckow, Omniah Ebeid, Erica Bosio Empirical Analysis,” European Journal of Law resource needs.34 and Economics 25, no. 3 (2008): 231–51. and Jorge Luis Silva Mendez, Good Practices for Courts: Helpful Elements for Good Court 2. Kenneth W. Dam, “The Judiciary and Performance and the World Bank’s Quality of Economic Development,” John M. Olin Law & Judicial Process Indicators (Washington, DC: Economics Working Paper 287, Second Series World Bank, 2016). (University of Chicago Law School, Chicago, 16. Marco Fabri and Nadia Carboni, “Saturn 2006). Guidelines for Judicial Time Management: 3. Roumeen Islam, “Do More Transparent Comments and Implementation Examples” Governments Govern Better?” Policy (European Commission for the Efficiency of Research Working Paper 3077 (World Bank, Justice, Strasbourg, 2015). Washington, DC, 2003). 17. Heike Gramckow, Omniah Ebeid, Erica Bosio 4. Gianluca Esposito, Sergi Lanau and Sebastiaan and Jorge Luis Silva Mendez, Good Practices Pompe, “Judicial System Reform in Italy: A for Courts: Helpful Elements for Good Court Key to Growth,” IMF Working Paper 14/32 Performance and the World Bank’s Quality of (International Monetary Fund, Washington, Judicial Process Indicators (Washington, DC: DC, 2014). World Bank, 2016). 5. Commercial claims with a claim value of 18. Council of Europe, Committee of Ministers, BGN 22,086 in Bulgaria, HUF 6,288,748 in “Recommendation No. R (84) 5 of the Hungary and RON 65,655 in Romania, which Committee of Ministers to Member States on is equivalent to twice the income per capita the Principles of Civil Procedure Designed to for each country. For more details, see the Improve the Functioning of Justice” (Council data notes. of Europe, Strasbourg, 1984), p. 2. 6. Bulgaria has both public and private 19. Doing Business database. These countries are enforcement agents available for litigants. Bulgaria, Croatia, Estonia, Germany, Latvia, However, most litigants for commercial cases Lithuania, the Netherlands and Poland. prefer to use private enforcement agents. For 20. Greece is the only EU member state with a the purposes of this analysis, this chapter limit on the number of adjournments, though refers to enforcement carried out by private this rule is rarely enforced in practice. bailiffs only. 21. Heike Gramckow, Omniah Ebeid, Erica Bosio 7. World Bank, Doing Business 2017: Equal and Jorge Luis Silva Mendez, Good Practices Opportunity for All (Washington, DC: World for Courts: Helpful Elements for Good Court Bank, 2016). Globally, Lithuania ranks number Performance and the World Bank’s Quality of 6 (with a distance to frontier score of 77.88), Judicial Process Indicators (Washington, DC: and the Republic of Korea number 1 (with a World Bank, 2016). distance to frontier score of 84.15). 22. “Circuit Court Civil Filing Fee Calculation,” 8. World Bank, “Mapping the Way through Virginia’s Judicial System, Supreme Court of Court Procedures in Bulgaria” (World Bank, Virginia, 2009, http:/ /webdev.courts.state Washington, DC, 2015), http:/ /documents .va.us/cgi-bin/DJIT/ef_djs_ccfees_calc .worldbank.org/curated .cgi#ID_CALC_FRM. ENFORCING CONTRACTS 83 23. Fee calculators are available at http://www .le.os.sud.rs/kalkulator-sudske-takse/. 24. Paul Byfield, “The Publication of Commercial Court Decisions in the Western Commonwealth of Independent States,” in Law and Transition 2011: Towards Better Courts (London: European Bank for Reconstruction and Development, 2011). 25. ROLII, “Lansarea Portalului de Jurisprudenţă Românească,” press release, December 11, 2015, http:/ /www.rolii.ro/stiri /58ad45a4e49009804800002c. 26. Heike Gramckow, Omniah Ebeid, Erica Bosio and Jorge Luis Silva Mendez, Good Practices for Courts: Helpful Elements for Good Court Performance and the World Bank’s Quality of Judicial Process Indicators (Washington, DC: World Bank, 2016); USAID (U.S. Agency for International Development) and UNDP (United Nations Development Programme), “Review on the Advanced International Experience and Practices for Implementing E-justice and Proposals for the Further Development of ‘E-SUD’ Information System in Uzbekistan” (USAID, Washington, DC; and UNDP, New York, 2015). 27. National Office of the Judiciary of Hungary, “The Effect of E-procedures,” press release, February 20, 2017, http:/ /birosag.hu/en /media/aktualis/effect-e-procedures. 28. Heike Gramckow, Omniah Ebeid, Erica Bosio and Jorge Luis Silva Mendez, Good Practices for Courts: Helpful Elements for Good Court Performance and the World Bank’s Quality of Judicial Process Indicators (Washington, DC: World Bank, 2016). 29. European Commission, European Small Claims Procedure, Special Eurobarometer 395 (Brussels: European Commission, 2013), http:/ /ec.europa.eu/public_opinion/archives /ebs/ebs_395_en.pdf. 30. World Bank, Fast-Tracking the Resolution of Minor Disputes: Experience from EU Member States (Washington, DC: World Bank, 2017), http:/ /documents.worldbank .org/curated/pt/670181487131729316 /pdf/112769-WP-P161975-PUBLIC -FasttrackingSmallClaimsinEU.pdf. 31. European Commission, “Report from the Commission to the European Parliament and the Council on Progress in Bulgaria under the Co-operation and Verification Mechanism,” COM(2017) 43 final (European Commission, Brussels, 2017), https:/ /ec.europa.eu/info /effective-justice/rule-law/assistance -bulgaria-and-romania-under-cvm/reports -progress-bulgaria-and-romania_en. 32. World Bank, “Bulgaria Judicial Performance, Caseload and Expenditure Review (2008– 2014)” (World Bank, Washington, DC, 2015). 33. For the 2013 study, see World Bank, “Romania Judicial Functional Review” (World Bank, Washington, DC, 2013), http:/ /documents .worldbank.org/curated/en/97198146829346 6653/pdf/796970WP0REVIS0Functional0R eview0EN.pdf. 34. The strategy, developed by the Superior Council of Magistracy, the Ministry of Justice, the Prosecutor General and the High Court of Cassation and Justice, is available at http:// www.just.ro/strategii-si-politici/strategii -nationale/. About Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania ƒƒ Doing Business measures aspects of business regulations affecting domestic small and medium-size firms defined based on standardized case scenarios and located in the largest business city of each economy. In addition, for 11 economies a second city is covered. ƒƒ Doing Business covers 11 areas of business regulation across 190 economies. Ten of these areas—starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency—are included in the distance to frontier score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. ƒƒ Doing Business in the European Union 2017: Bulgaria, Hungary and Romania covers only 5 Doing Business indicator sets: starting a business, dealing with construction permits, getting electricity, registering property and enforcing contracts. ƒƒ Doing Business and Doing Business in the European Union 2017: Bulgaria, Hungary and Romania rely on four main sources of information: the relevant laws and regulations, expert respondents, the governments of the economies and cities covered and the World Bank Group regional staff. ƒƒ Governments use Doing Business as a source of objective data providing unique insights into good practices worldwide. Many Doing Business indicators are “actionable”—though depending on the context, they may not always be “action-worthy.” ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 85 T he foundation of Doing Business is apply to firms at different stages of their a legal scoring methodology, such as the notion that economic activity, life cycle. The results for each economy protecting minority investors or getting particularly private sector develop- can be compared with those for 189 other credit, are typically excluded because ment, benefits from clear and coherent economies and over time. they mostly look at national laws with rules: rules that set out and clarify prop- general applicability. erty rights and facilitate the resolution of disputes and rules that enhance the FACTORS MEASURED BY Doing Business measures aspects of busi- predictability of economic interactions and DOING BUSINESS AND ness regulation affecting domestic small provide contractual partners with essential SUBNATIONAL DOING and medium-size firms defined based on protections against arbitrariness and abuse. BUSINESS standardized case scenarios and located Such rules are much more effective in in the largest business city of each shaping the incentives of economic agents Doing Business captures several impor- economy. In addition, for 11 economies a in ways that promote growth and develop- tant dimensions of the regulatory second city is covered. Subnational Doing ment where they are reasonably efficient in environment as it applies to local firms. Business covers a subset of the 11 areas of design, are transparent and accessible to It provides quantitative indicators on business regulation that Doing Business those for whom they are intended and can regulation for starting a business, deal- covers across 190 economies. be implemented at a reasonable cost. The ing with construction permits, getting quality of the rules also has a crucial bearing electricity, registering property, getting Doing Business relies on four main sources on how societies distribute the benefits and credit, protecting minority investors, of information: the relevant laws and finance the costs of development strategies paying taxes, trading across borders, regulations, Doing Business respondents, and policies. enforcing contracts and resolving the governments of the economies cov- insolvency (table 8.1). Subnational Doing ered and the World Bank Group regional Good rules are a key to social inclusion. Business focuses on indicators that are staff. More than 39,000 professionals in Enabling growth—and ensuring that all most likely to vary from city to city, such 190 economies have assisted in providing people, regardless of income level, can as dealing with construction permits or the data that inform the Doing Business participate in its benefits—requires an registering property. Indicators that use indicators over the past 14 years. environment where new entrants with drive and good ideas can get started in business and where good firms can TABLE 8.1 What Doing Business and Subnational Doing Business measure— invest and expand. The role of govern- 11 areas of business regulation ment policy in the daily operations of Indicator set What is measured domestic small and medium-size firms is Typically included in Subnational Doing Business reports a central focus of the Doing Business data. Starting a business Procedures, time, cost and paid-in minimum capital to start a The objective is to encourage regulation limited liability company that is designed to be efficient, acces- Dealing with construction permits Procedures, time and cost to complete all formalities to build a sible to all and simple to implement. warehouse and the quality control and safety mechanisms in the construction permitting system Onerous regulation diverts the energies Getting electricity Procedures, time and cost to get connected to the electrical grid, of entrepreneurs away from developing the reliability of the electricity supply and the transparency of tariffs their businesses. But regulation that is Registering property Procedures, time and cost to transfer a property and the quality of efficient, transparent and implemented in the land administration system a simple way facilitates business expan- Enforcing contracts Time and cost to resolve a commercial dispute and the quality of sion and innovation, and makes it easier judicial processes for aspiring entrepreneurs to compete on Not typically included in Subnational Doing Business reports an equal footing. Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in Doing Business measures aspects of corporate governance business regulation for domestic firms Paying taxes Payments, time and total tax rate for a firm to comply with all tax through an objective lens. The focus of regulations as well as post-filing processes the project is on small and medium-size Trading across borders Time and cost to export the product of comparative advantage and import auto parts companies in the largest business city of an economy. Based on standardized case Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency studies, Doing Business presents quantita- Labor market regulation Flexibility in employment regulation and aspects of job quality tive indicators on the regulations that 86 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA The latest Doing Business report (Doing regulation. But they go beyond a data col- of Egypt, Italy, the Philippines and Business 2017: Equal Opportunity for All) lection exercise. They have proved to be Serbia. Seventeen economies—includ- includes a gender dimension in four of strong motivators for regulatory reform ing Indonesia, Kenya, Mexico, Nigeria, the 11 indicator sets.1 at the local level: the Philippines, and the Russian ƒƒ The data produced are comparable Federation—have undertaken two or The subnational Doing Business stud- across locations within the economy more rounds of subnational data col- ies expand the Doing Business analysis and internationally, enabling loca- lection to measure progress over time beyond the largest business city of an tions to benchmark their results both (figure 8.2). Recently subnational stud- economy. They measure variation in locally and globally. Comparisons of ies were completed in Kenya, Mexico, regulations or in the implementation of locations that are within the same the United Arab Emirates, Afghanistan national laws across locations within an economy and therefore share the and Kazakhstan. Ongoing studies economy (as in South Africa) or a region same legal and regulatory framework include those in Colombia (32 cities) (as in this report). Projects are under- can be revealing: local officials find it and Nigeria (37 states). taken at the request of governments. hard to explain why doing business is more difficult in their jurisdiction than Doing Business in the European Union 2017: Data collected by subnational studies in a neighboring one. Bulgaria, Hungary and Romania is the first over the past three years show that there ƒƒ Pointing out good practices that exist report of the subnational Doing Business can be substantial variation within an in some locations but not others within series in Bulgaria, Hungary and Romania. economy (figure 8.1). In Mexico in 2016, an economy helps policy makers It measures 6 cities in Bulgaria (Burgas, for example, registering a property trans- recognize the potential for replicating Pleven, Plovdiv, Ruse, Sofia and Varna), 7 fer took as few as 9 days in Puebla and these good practices. This can prompt cities in Hungary (Budapest, Debrecen, as many as 78 in Oaxaca. Indeed, within discussions of regulatory reform Gyor, Miskolc, Pecs, Szekesfehervar and the same economy one can find locations across different levels of government, Szeged) and 9 cities in Romania (Brasov, that perform as well as economies rank- providing opportunities for local Bucharest, Cluj-Napoca, Constanta, ing in the top 20 on the ease of register- governments and agencies to learn Craiova, Iasi, Oradea, Ploiesti and ing property and locations that perform from one another and resulting in local Timisoara). as poorly as economies ranking in the ownership and capacity building. bottom 40 on that indicator. How the indicators are selected Since 2005 subnational reports have The choice of the 11 sets of Doing Business The subnational Doing Business studies covered 438 locations in 65 economies, indicators has been guided by economic create disaggregated data on business including Colombia, the Arab Republic research and firm-level data, specifically FIGURE 8.1  Different locations, different regulatory processes, same economy Time to register property (days) 80 Oaxaca (78) Isiolo (73) 60 58 Wroclaw (51) Mangaung (52) Mombasa (41) 40 33 32 26 Johannesburg Melilla (26) Bialystok (23) 20 (18) 17 Madrid Puebla (12.5) (9) 0 Kenya Mexico Poland South Africa Spain Least time Most time Average time Source: Subnational Doing Business database. Note: The average time shown for each economy is based on all locations covered by the data: 11 cities in Kenya in 2016, 32 states in Mexico in 2016, 18 cities in Poland in 2015, 9 cities in South Africa in 2015 and 19 cities in Spain in 2015. ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 87 FIGURE 8.2  Comparing regulation at the local level: subnational Doing Business studies 56 cities in Europe and Central Asia 56 cities in OECD high-income economies 30 cities in the Middle East and North Africa 41 cities 76 cities in South Asia in East Asia and the Pacific 81 cities 98 cities in Sub-Saharan Africa in Latin America and the Caribbean ECONOMIES WITH ONE SUBNATIONAL OR REGIONAL STUDY ECONOMIES WITH MORE THAN ONE SUBNATIONAL OR REGIONAL STUDY Source: Subnational Doing Business database. data from the World Bank Enterprise Doing Business in the European Union 2017: way to address social and environmen- Surveys.2 These surveys provide data Bulgaria, Hungary and Romania covers 5 tal concerns—such as by imposing a highlighting the main obstacles to Doing Business areas: starting a business, greater regulatory burden on activities business activity as reported by entre- dealing with construction permits, get- that pose a high risk to the population preneurs in more than 130,000 firms ting electricity, registering property and and a lesser one on lower-risk activities. in 139 economies. Access to finance enforcing contracts. These Doing Business Thus the economies that rank highest and access to electricity, for example, indicators were selected on the basis of on the ease of doing business are not are among the factors identified by the their relevance to the countries’ context those where there is no regulation—but surveys as important to businesses— and ability to show variation across the those where governments have man- inspiring the design of the Doing Business cities measured. aged to create rules that facilitate indicators on getting credit and getting interactions in the marketplace without electricity. Some Doing Business indicators give a needlessly hindering the development higher score for more regulation and of the private sector. The design of the Doing Business indicators better-functioning institutions (such has also been informed by theoretical as courts). Higher scores are given for The distance to frontier and insights gleaned from extensive research stricter disclosure requirements for ease of doing business ranking and the literature on the role of institutions related-party transactions, for example, To provide different perspectives on the in enabling economic development. In in the area of protecting minority inves- data, Doing Business presents data both addition, the background papers develop- tors. Higher scores are also given for a for individual indicators and for two ing the methodology for each of the Doing simplified way of applying regulation aggregate measures: the distance to Business indicator sets have established that keeps compliance costs for firms frontier score and the ease of doing busi- the importance of the rules and regula- low—such as by easing the burden ness ranking. This report focuses only on tions that Doing Business focuses on for of business start-up formalities with the distance to frontier score and ranking such economic outcomes as trade vol- a one-stop shop or through a single for individual indicators. umes, foreign direct investment, market online portal. Finally, Doing Business capitalization in stock exchanges and scores reward economies that apply a The distance to frontier score aids in private credit as a percentage of GDP.3 risk-based approach to regulation as a assessing the absolute level of regulatory 88 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA performance and how it improves over change in the economy’s regulatory envi- rankings of the 22 cities benchmarked time. This measure shows the distance ronment over time as measured by Doing on five topics: starting a business, deal- of each economy to the “frontier,” Business. The distance to frontier score is ing with construction permits, getting which represents the best performance first computed for each topic and then electricity, registering property and observed on each of the indicators across averaged across all topics to compute enforcing contracts. The distance to all economies in the Doing Business the aggregate distance to frontier score. frontier score for each indicator captures sample since 2005 or the third year in The ranking on the ease of doing business the gap between a city’s performance and which data were collected for the indi- complements the distance to frontier the best practices globally. For starting cator. The frontier is set at the highest score by providing information about a business, for example, New Zealand possible value for indicators calculated as an economy’s performance in business has the smallest number of procedures scores, such as the strength of legal rights regulation relative to the performance of required (one) and the shortest time index or the quality of land administration other economies as measured by Doing to fulfill them (0.5 days). Slovenia has index. This underscores the gap between Business. the lowest cost (0.0), and Australia, a particular economy’s performance and Colombia and 111 other economies have the best performance at any point in Doing Business in the European Union 2017: no paid-in minimum capital requirement time and helps in assessing the absolute Bulgaria, Hungary and Romania includes (table 8.2). TABLE 8.2  What is the frontier in regulatory practice? Topic and indicator Who set the frontier Frontier Worst Starting a business Procedures (number) New Zealand 1 18a Time (days) New Zealand 0.5 100b Cost (% of income per capita) Slovenia 0.0 200.0b Minimum capital (% of income per capita) Australia; Colombiac 0.0 400.0b Dealing with construction permits Procedures (number) No economy was at the frontier as of 5 30a June 1, 2016. Time (days) Singapore 26 373b Cost (% of warehouse value) No economy was at the frontier as of 0.0 20.0b June 1, 2016. Building quality control index (0–15) Luxembourg; New Zealand 15 0d Getting electricity Procedures (number) Germany; Republic of Koreae 3 9a Time (days) Republic of Korea; St. Kitts and Nevis 18 248b Cost (% of income per capita) Japan 0.0 8,100.0b Reliability of supply and transparency of tariffs index (0–8) Belgium; Ireland; Malaysia f 8 0d Registering property Procedures (number) Georgia; Norway; Portugal; Sweden 1 13a Time (days) Georgia; New Zealand; Portugal 1 210b Cost (% of property value) Saudi Arabia 0.0 15.0b Quality of land administration index (0–30) No economy has attained the frontier yet. 30 0d Enforcing contracts Time (days) Singapore 120 1,340b Cost (% of claim) Bhutan 0.1 89.0b Quality of judicial processes index (0–18) No economy has attained the frontier yet. 18 0d Source: Doing Business database. a. Worst performance is defined as the 99th percentile among all economies in the Doing Business sample. b. Worst performance is defined as the 95th percentile among all economies in the Doing Business sample. c. Another 111 economies also have a paid-in minimum capital requirement of 0. d. Worst performance is the worst value recorded. e. In 14 other economies it also takes only three procedures to get an electricity connection. f. Another 23 economies also have a score of 8 on the reliability of supply and transparency of tariffs index. ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 89 Doing Business uses a simple averaging In the same formulation, to mitigate the and unobserved components—yield a approach for weighting component effects of extreme outliers in the distri- ranking nearly identical to the simple indicators, calculating rankings and butions of the rescaled data for most average used by Doing Business.5 Thus determining the distance to frontier component indicators (very few econo- Doing Business uses the simplest method: score.4 Each topic covered by Doing mies need 700 days to complete the weighting all topics equally and, within Business relates to a different aspect of procedures to start a business, but many each topic, giving equal weight to each of the business regulatory environment. The need nine days), the worst performance the topic components. distance to frontier scores and rankings of is calculated after the removal of outliers. each economy vary, often considerably, The definition of outliers is based on the A location’s distance to frontier score is across topics, indicating that a strong distribution for each component indica- indicated on a scale from 0 to 100, where performance by an economy in one area tor. To simplify the process two rules 0 represents the worst performance and of regulation can coexist with weak per- were defined: the 95th percentile is used 100 the frontier. All distance to frontier formance in another. One way to assess for the indicators with the most dispersed calculations are based on a maximum of the variability of an economy’s regulatory distributions (including minimum capital five decimals. However, indicator ranking performance is to look at its distance to and the time and cost indicators), and calculations and the ease of doing busi- frontier scores across topics. Morocco, the 99th percentile is used for number of ness ranking calculations are based on for example, has an overall distance to procedures (figure 8.3). two decimals. frontier score of 67.50, meaning that it is two-thirds of the way from the worst In the second step, for each economy the to the best performance. Its distance to scores obtained for individual indicators FACTORS NOT MEASURED frontier score is 92.34 for starting a busi- are aggregated through simple averaging BY DOING BUSINESS AND ness, 83.51 for paying taxes and 81.12 for for each topic for which performance is SUBNATIONAL DOING trading across borders. At the same time, measured and ranked; for the 22 cities BUSINESS it has a distance to frontier score of 33.89 in Doing Business in the European Union for resolving insolvency, 45 for getting 2017: Bulgaria, Hungary and Romania, this Many important policy areas are not credit and 53.33 for protecting minority is done for starting a business, dealing covered by Doing Business; even within investors. with construction permits, getting elec- the areas it covers its scope is narrow tricity, registering property and enforcing (table 8.3). Doing Business does not Calculation of the distance to contracts. More complex aggregation measure the full range of factors, policies frontier score methods—such as principal components and institutions that affect the quality Calculating the distance to frontier score for each economy involves two FIGURE 8.3 How are distance to frontier scores calculated for indicators? An example main steps. In the first step individual A time-and-motion topic: dealing with construction permits component indicators are normalized Distance to frontier to a common unit where each of the 36 score for procedures component indicators y (except for the 100 Regulatory frontier total tax rate) is rescaled using the linear Best performance transformation (worst − y)/(worst − (frontier): 5 procedures frontier). In this formulation the frontier 80 represents the best performance on the indicator across all economies since 2005 or the third year in which data 60 for the indicator were collected. Both the best performance and the worst 40 performance are established every five years based on the Doing Business data Worst for the year in which they are estab- performance 20 (99th percentile): lished, and remain at that level for the 30 procedures five years regardless of any changes in data in interim years. Thus an economy 0 may set the frontier for an indicator even 5 10 15 20 25 30 35 Procedures (number) though it is no longer at the frontier in a subsequent year. Source: Doing Business database. A legal topic: protecting minority investors Distance to frontier score for extent of disclosure index 100 Regulatory frontier 90 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA TABLE 8.3 What Doing Business does not cover to measure—the benefits of the social and economic programs funded with Examples of areas not covered tax revenues. Measuring the quality and Macroeconomic stability efficiency of business regulation pro- Development of the financial system vides only one input into the debate on the regulatory burden associated with Quality of the labor force achieving regulatory objectives, which Incidence of bribery and corruption can differ across economies. Market size Lack of security ADVANTAGES AND Examples of aspects not included within the areas covered LIMITATIONS OF THE In paying taxes, personal income tax rates METHODOLOGY In getting credit, the monetary policy stance and the associated ease or tightness of credit conditions for firms The Doing Business methodology is In trading across borders, export or import tariffs and subsidies designed to be an easily replicable way to benchmark specific aspects of business In resolving insolvency, personal bankruptcy rules regulation. Its advantages and limitations should be understood when using the of an economy’s business environment business regulation reforms should not data (table 8.4). or its national competitiveness. It does focus only on these aspects, because not, for example, capture aspects of those that it does not measure are also Ensuring comparability of the data across macroeconomic stability, development important. a global set of economies is a central of the financial system, market size, the consideration for the Doing Business quality of the labor force or the incidence Doing Business does not attempt to quan- indicators, which are developed around of bribery and corruption. tify all costs and benefits of a particular standardized case scenarios with specific law or regulation to society as a whole. assumptions. One such assumption is The focus is deliberately narrow even The paying taxes indicators measure the the location of a standardized business— within the relatively small set of indica- total tax rate, which, in isolation, is a cost the subject of the Doing Business case tors included in Doing Business. The time to businesses. However, the indicators study—in the largest business city of and cost required for the logistical pro- do not measure—nor are they intended the economy. The reality is that business cess of exporting and importing goods is captured in the trading across borders TABLE 8.4 Advantages and limitations of the Doing Business methodology indicators, for example, but these indica- tors do not measure the cost of tariffs or Feature Advantages Limitations of international transport. Doing Business Use of standardized Makes data comparable across Reduces scope of data; only regulatory case scenarios economies and methodology reforms in areas measured can be provides a narrow perspective on the transparent, using case scenarios that systematically tracked; the case infrastructure challenges that firms face, are common globally scenarios may not be the most common in a particular economy particularly in the developing world, Focus on largest Makes data collection manageable Reduces representativeness of data through these indicators. It does not business city a (cost-effective) and data comparable for an economy if there are significant address the extent to which inadequate differences across locations roads, rail, ports and communications Focus on domestic and Keeps attention on formal sector— Unable to reflect reality for informal may add to firms’ costs and undermine formal sector where regulations are relevant and sector—important where that is firms are most productive large—or for foreign firms facing a competitiveness (except to the extent different set of constraints that the trading across borders indicators Reliance on expert Ensures that data reflect knowledge Indicators less able to capture variation indirectly measure the quality of ports respondents of those with most experience in in experiences among entrepreneurs conducting types of transactions and border connections). Similar to the measured indicators on trading across borders, all Focus on the law Makes indicators “actionable”— Where systematic compliance with the aspects of commercial legislation are not because the law is what policy makers law is lacking, regulatory changes will covered by those on starting a business can change not achieve full results desired or protecting minority investors. And Source: Doing Business database. while Doing Business measures only a few a. In economies with a population of more than 100 million as of 2013, Doing Business covers business regulation in both the largest and second largest business city. Subnational Doing Business studies go beyond the largest aspects within each area that it covers, business city within a country or region. ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 91 regulations and their enforcement may helps explain differences between the de Relevant laws and regulations differ within a country, particularly in fed- jure data provided by Doing Business and Indicators presented in Doing Business eral states and large economies. But gath- the de facto insights offered by the World in the European Union 2017: Bulgaria, ering data for every relevant jurisdiction Bank Enterprise Surveys.6 Levels of infor- Hungary and Romania are based on laws in each of the 190 economies covered by mality tend to be higher in economies and regulations. Besides participating in Doing Business is infeasible. Nevertheless, with particularly burdensome regula- interviews or filling out written question- where policy makers are interested in tion. Compared with their formal sector naires, expert respondents provided ref- generating data at the local level, beyond counterparts, firms in the informal sector erences to the relevant laws, regulations the largest business city, Doing Business typically grow more slowly, have poorer and fee schedules, which were collected has complemented its global indicators access to credit and employ fewer work- and analyzed by the subnational Doing with subnational studies. Coverage was ers—and these workers remain outside Business team. extended to the second largest business the protections of labor law and, more city in economies with a population of generally, other legal protections embed- The team collects the texts of the relevant more than 100 million (as of 2013) in ded in the law.7 Firms in the informal sec- laws and regulations and checks the ques- Doing Business 2015. tor are also less likely to pay taxes. Doing tionnaire responses for accuracy. The team Business measures one set of factors that will examine the civil procedure code, for Doing Business recognizes the limitations help explain the occurrence of informal- example, to check the maximum number of the standardized case scenarios and ity and give policy makers insights into of adjournments in a commercial court assumptions. But while such assump- potential areas of regulatory reform. dispute, and read the insolvency code to tions come at the expense of generality, identify if the debtor can initiate liquidation they also help to ensure the comparabil- or reorganization proceeding. These and ity of data. Some Doing Business topics DATA COLLECTION IN other types of laws are available on the are complex, and so it is important that PRACTICE Doing Business law library website.8 Since the standardized cases are defined care- the data collection process involves an fully. For example, the standardized case The Doing Business data are based on a annual update of an established database, scenario usually involves a limited liabil- detailed reading of domestic laws and having a very large sample of respondents ity company or its legal equivalent. There regulations as well as administrative is not strictly necessary. In principle, the are two reasons for this assumption. requirements. The Doing Business 2017 role of the contributors is largely advisory— First, private, limited liability companies report covers 190 economies—includ- helping the Doing Business team to locate are the most prevalent business form ing some of the smallest and poorest and understand the laws and regulations. (for firms with more than one owner) economies, for which little or no data are There are quickly diminishing returns to an in many economies around the world. available from other sources. The data expanded pool of contributors. This not- Second, this choice reflects the focus of are collected through several rounds of withstanding, the number of contributors Doing Business on expanding opportuni- communication with expert respondents rose by 58% between 2010 and 2016. ties for entrepreneurship: investors are (both private sector practitioners and encouraged to venture into business government officials), through responses Extensive consultations with multiple when potential losses are limited to their to questionnaires, conference calls, contributors are conducted by the team capital participation. written correspondence and visits by to minimize measurement error for the the team. Doing Business relies on four rest of the data. For some indicators—for Another assumption underlying the main sources of information: the relevant example, those on dealing with construc- Doing Business indicators is that entre- laws and regulations, Doing Business tion permits, enforcing contracts and preneurs have knowledge of and comply respondents, the governments of the resolving insolvency—the time com- with applicable regulations. In practice, economies covered and the World Bank ponent and part of the cost component entrepreneurs may not be aware of what Group regional staff (figure 8.4). For a (where fee schedules are lacking) are needs to be done or how to comply with detailed explanation of the Doing Business based on actual practice rather than regulations and may lose considerable methodology, see the data notes. the law on the books. This introduces a time trying to find out. Alternatively, they degree of judgment by respondents on may intentionally avoid compliance—by Subnational Doing Business follows similar what actual practice looks like. When not registering for social security, for data collection methods. However, sub- respondents disagree, the time indicators example. Firms may opt for bribery and national Doing Business studies are driven reported by Doing Business represent the other informal arrangements intended by client demand and do not follow the median values of several responses given to bypass the rules where regulation is same timeline as global Doing Business under the assumptions of the standard- particularly onerous—an aspect that publications. ized case. 92 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 8.4  How Doing Business collects and verifies the data Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Questionnaire Data collection and analysis Report development launch   The Doing Business team distributes the questionnaires, analyzes the relevant laws and regulations along   The Doing Business team updates with the information in the Data verification   The report is published, the questionnaires and consults questionnaires. followed by media outreach with internal and external experts. and findings dissemination.   The Doing Business team travels to   The Doing Business team shares around 30 economies. preliminary information on reforms with governments (through the World   The Doing Business team engages in Bank Group’s Board of Executive conferences calls, video conferences Directors) and World Bank Group and in-person meetings with regional teams for their feedback. government officials and private sector practitioners.   The Doing Business team analyzes the data and writes the report. Comments   Governments and World Bank Group on the report and data are received regional teams submit information on from across the World Bank Group regulatory changes that could through an internal review process. potentially be included in the global count of regulatory reforms. Expert respondents the company or property registry). Local other experts providing information to For Doing Business in the European Union and national government officials and Doing Business are therefore better able 2017: Bulgaria, Hungary and Romania, judges also provided information that is to assess the process of starting a busi- more than 700 professionals across incorporated into the indicators. ness than are individual firms. They also the three economies assisted in provid- have access to current regulations and ing the data that inform the five areas Following the standard methodological practices, while a firm may have faced a covered. The subnational Doing Business approach for time-and-motion studies, different set of rules when incorporating website and the acknowledgments Doing Business in the European Union years before. The second reason is that section of this report list the names 2017: Bulgaria, Hungary and Romania the Doing Business questionnaires mostly and credentials of those respondents breaks down each process or transaction, gather legal information, which firms wishing to be acknowledged. Selected such as starting a business or register- are unlikely to be fully familiar with. For on the basis of their expertise in these ing a building, into separate steps to example, few firms will know about all areas, respondents are professionals ensure a better estimate of time. The the many legal procedures involved in who routinely administer or advise on time estimate for each step is given by resolving a commercial dispute through the legal and regulatory requirements practitioners with significant and routine the courts, even if they have gone through in the specific areas covered by Doing experience in the transaction. the process themselves. But a litigation Business in the European Union 2017: lawyer should have little difficulty in Bulgaria, Hungary and Romania. Because There are two main reasons that the providing the requested information on of the focus on legal and regulatory Doing Business methodology for data all the processes. arrangements, most of the respondents collection does not include a survey of are legal professionals such as lawyers firms. The first relates to the frequency Governments and World Bank or notaries. Architects, engineers, and with which firms engage in the transac- Group staff other professionals answered the ques- tions captured by the indicators, which After analyzing laws and regulations and tionnaires related to dealing with con- is generally low. For example, a firm goes conducting follow-up interviews with struction permits and getting electricity. through the start-up process once in its Doing Business in the European Union 2017: Information that is incorporated into the existence, while an incorporation lawyer Bulgaria, Hungary and Romania respon- indicators is also provided by certain may carry out 10 such transactions each dents, the subnational Doing Business public officials (such as registrars from month. The incorporation lawyers and team shared preliminary findings of the ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 93 report with governments and public Many Doing Business indicators can be as a repository of actionable, objective agencies operating at the national and considered actionable. For example, data providing unique insights into local levels. Through this process, gov- governments can set the minimum good practices worldwide as they have ernment authorities had the opportunity capital requirement for new firms, invest come to understand the importance of to comment on the preliminary data, in in company and property registries to business regulation as a driving force meetings with World Bank Group staff as increase their efficiency, or improve the of competitiveness. To ensure the well as in writing. Having public officials efficiency of tax administration by adopt- coordination of efforts across agencies, discuss and comment on the preliminary ing the latest technology to facilitate the economies such as Colombia, Malaysia results has proven to be an important preparation, filing and payment of taxes and Russia have formed regulatory activity, not only to improve the qual- by the business community. And they can reform committees. These committees ity of the report, but also to enhance the undertake court reforms to shorten delays use the Doing Business indicators as dialogue between the local governments in the enforcement of contracts. But some one input to inform their programs for and the World Bank Group at the subna- Doing Business indicators capture proce- improving the business environment. tional level. dures, time and costs that involve private More than 40 other economies have sector participants, such as lawyers, also formed such committees. In East notaries, architects, electricians or freight Asia and the Pacific they include: Brunei USES OF THE DOING forwarders. Governments may have little Darussalam; Indonesia; the Republic of BUSINESS DATA influence in the short run over the fees Korea; the Philippines; Taiwan, China; these professions charge, though much and Thailand. In the Middle East and Doing Business was designed with two can be achieved by strengthening profes- North Africa: the Arab Republic of main types of users in mind: policy makers sional licensing regimes and preventing Egypt, Kuwait, Morocco, Saudi Arabia and researchers.9 It is a tool that govern- anticompetitive behavior. And govern- and the United Arab Emirates. In South ments can use to design sound business ments have no control over the geographic Asia: India and Pakistan. In Europe regulatory policies. Nevertheless, the location of their economy, a factor that can and Central Asia: Albania, Croatia, Doing Business data are limited in scope adversely affect businesses. Georgia, Kazakhstan, Kosovo, the and should be complemented with other Kyrgyz Republic, the former Yugoslav sources of information. Doing Business While many Doing Business indicators Republic of Macedonia, Moldova, focuses on a few specific rules relevant to are actionable, this does not necessarily Montenegro, Poland, Tajikistan, Ukraine the specific case studies analyzed. These mean that they are all “action-worthy” and Uzbekistan. In Sub-Saharan Africa: rules and case studies are chosen to be in a particular context. Business regula- the Democratic Republic of Congo, illustrative of the business regulatory tory reforms are only one element of a the Republic of Congo, Côte d’Ivoire, environment, but they are not a compre- strategy aimed at improving competitive- Burundi, Guinea, Kenya, Liberia, Malawi, hensive description of that environment. ness and establishing a solid foundation Mali, Mauritius, Nigeria, Rwanda, Sierra By providing a unique data set that for sustainable economic growth. There Leone, Togo, Zambia and Zimbabwe. enables analysis aimed at better under- are many other important goals to pur- And in Latin America: Chile, Costa Rica, standing the role of business regulation in sue—such as effective management of the Dominican Republic, Guatemala, economic development, Doing Business is public finances, adequate attention to Mexico, Panama and Peru. also an important source of information education and training, adoption of the for researchers. latest technologies to boost economic Many economies share knowledge on productivity and the quality of public ser- the regulatory reform process related to Governments and policy makers vices, and appropriate regard for air and the areas measured by Doing Business. Doing Business offers policy makers a water quality to safeguard public health. Among the most common venues for benchmarking tool useful in stimulating Governments must decide what set of this knowledge sharing are peer-to-peer policy debate, both by exposing potential priorities best suits their needs. To say learning events—workshops where offi- challenges and by identifying good prac- that governments should work toward cials from different governments across tices and lessons learned. Despite the a sensible set of rules for private sector a region or even across the globe meet narrow focus of the indicators, the initial activity (as embodied, for example, in to discuss the challenges of regulatory debate in an economy on the results they the Doing Business indicators) does not reform and to share their experiences. highlight typically turns into a deeper suggest that doing so should come at the discussion on areas where business expense of other worthy policy goals. Think tanks and other research regulatory reform is needed, including organizations areas well beyond those measured by Over the past decade governments have Doing Business data are widely used Doing Business. increasingly turned to Doing Business by think tanks and other research 94 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA organizations, both for the development borders—which measure the time, pro- Furthermore, foreign direct investment of new indexes and to produce research cedural and monetary costs of exporting can either impede or promote domestic papers. and importing—several empirical studies investment depending on how business have assessed how trade costs affect the friendly entry regulations are in the host Many research papers have shown the export and import performance of econo- economy. In fact, foreign direct invest- importance of business regulation and mies. A rich body of empirical research ment has been shown to crowd out how it relates to different economic out- shows that efficient infrastructure and a domestic investment in economies with comes.10 One of the most cited theoretical healthy business environment are posi- costly processes for starting a business.21 mechanisms on how excessive business tively linked to export performance.14 Another study showed that economies regulation affects economic performance with higher international market integra- and development is that it makes it too Improving infrastructure efficiency and tion have, on average, easier and simpler costly for firms to engage in the formal trade logistics bring documented benefits processes for starting a business.22 economy, causing them not to invest to an economy’s balance of trade and or to move to the informal economy. individual traders but delays in transit Recent empirical work shows the impor- Recent studies have conducted extensive time can reduce exports: a study ana- tance of well-designed credit market empirical testing of this proposition lyzing the importance of trade logistics regulations and well-functioning court using Doing Business and other related found that a 1-day increase in transit time systems for debt recovery. For example, indicators. According to one study, for reduces exports by an average of 7% a reform making bankruptcy laws more example, a reform that simplified busi- in Sub-Saharan Africa.15 Another study efficient significantly improved the recov- ness registration in Mexican munici- found that a 1-day delay in transport time ery rate of viable firms in Colombia.23 In palities increased registration by 5% and for landlocked economies and for time a multi-economy study, the introduction wage employment by 2.2%—and, as a sensitive agricultural and manufacturing of collateral registries for movable assets result of increased competition, reduced products has a particularly large negative was shown to increase firms’ access to the income of incumbent businesses by impact, reducing trade by more than 1% finance by approximately 8%.24 In India 3%.11 Business registration reforms in for each day of delay.16 Delays while clear- the establishment of debt recovery tri- Mexico also resulted in 14.9% of informal ing customs procedures also negatively bunals reduced non-performing loans by business owners shifting to the formal impact a firm’s ability to export, particu- 28% and lowered interest rates on larger economy.12 larly when goods are destined for new loans, suggesting that faster processing clients.17 And in economies with flexible of debt recovery cases cut the cost of Considerable effort has been devoted to entry regulations, a 1% increase in trade credit.25 An in-depth review of global bank studying the link between government is associated with an increase of more flows revealed that firms in economies regulation of firm entry and employment than 0.5% in income per capita, but has with better credit information sharing growth. In Portugal business reforms no positive income effects in economies systems and higher branch penetration resulted in a reduction of the time and with more rigid regulation.18 Research evade taxes to a lesser degree.26 Strong cost needed for company formalization, has also found that—although domestic shareholder rights have been found to increasing the number of business start- buyers benefit from having goods of lower financial frictions, especially for ups by 17% and creating 7 new jobs per varying quality and price to choose firms with large external finance relative 100,000 inhabitants per month. But from—import competition only results in to their capital stock (such as small firms although these start-ups were smaller minimal quality upgrading in OECD high- or firms in distress).27 and more likely to be female-owned income economies with cumbersome than before the reform, they were also regulation while it has no effect on quality There is also a large body of theoretical headed by less experienced and poorly upgrading in non-OECD economies with and empirical work investigating the educated entrepreneurs with lower sales cumbersome regulation.19 Therefore, distortionary effects of high tax rates and per worker.13 the potential gains for consumers from cumbersome tax codes and procedures. import competition are reduced where According to one study, business licens- In many economies companies engaged regulations are cumbersome. ing among retail firms rose 13% after a in international trade struggle with high tax reform in Brazil.28 Another showed trade costs arising from transport, logis- Doing Business measures aspects of busi- that a 10% reduction in tax complexity is tics and regulations, impeding their com- ness regulation affecting domestic firms. comparable to a 1% reduction in effective petitiveness and preventing them from However, research shows that better corporate tax rates.29 taking full advantage of their productive business regulation—as measured by capacity. With the availability of Doing Doing Business—is associated with higher Labor market regulation—as measured Business indicators on trading across levels of foreign direct investment.20 by Doing Business—has been shown to ABOUT DOING BUSINESS AND DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 95 have important implications for the labor regions. They prove that, taken individu- the topics, depending on which are considered of more or less importance in the context of a market. According to one study, graduat- ally, Doing Business indicators remain a specific economy. ing from school during a time of adverse useful starting point for a rich body 6. Mary Hallward-Driemeier and Lant Pritchett, economic conditions has a persistent, of analysis across different areas and “How Business Is Done in the Developing World: Deals versus Rules.” Journal of Economic harmful effect on workers’ subsequent dimensions in the research world. Perspectives 29, no. 3 (2015): 121-40. employment opportunities. The persis- 7. Friedrich Schneider, “The Informal Sector in tence of this negative effect is stronger Doing Business has contributed substan- 145 Countries” (Department of Economics, University Linz, Linz, 2005). See also Rafael in countries with stricter employment tially to the debate on the importance of La Porta and Andrei Shleifer, “The Unofficial protection legislation.30 Rigid employ- business regulation for economic devel- Economy and Economic Development,” Tuck ment protection legislation can also have opment. By expanding the time series School of Business Working Paper 2009-57 (Dartmouth College, Hanover, NH, 2008), negative distributional consequences. A and the scope of the data with the recent available at Social Science Research Network study on Chile, for example, found that methodology expansion, Doing Business (SSRN), http:/ /ssrn.com/abstract=1304760. the tightening of job security rules was hopes to continue being a key reference 8. For the law library, see the website at http:// www.doingbusiness.org/law-library. associated with lower employment rates going forward. 9. The focus of the Doing Business indicators for youth, unskilled workers and women.31 remains the regulatory regime faced by domestic firms engaging in economic activity in the largest business city of an economy. Indexes Doing Business was not initially designed to Doing Business identified 17 different inform decisions by foreign investors, though data projects or indexes that use Doing NOTES investors may in practice find the data useful as a proxy for the quality of the national Business as one of its sources of data.32 investment climate. Analysis done in the Most of these projects or institutions use 1. The indicators are starting a business, World Bank Group’s Global Indicators Group registering property, enforcing contracts and has shown that countries that have sensible indicator level data and not the aggregate labor market regulation. rules for domestic economic activity also tend ease of doing business ranking. Starting a 2. Data from the World Bank Enterprise Surveys to have good rules for the activities of foreign business is the indicator set most widely and Doing Business complement each in the local economy. other as two sides of the same coin. They 10. The papers cited here are just a few examples used, followed by labor market regulation both provide useful information on the of research done in the areas measured by and paying taxes. These indexes typically business environment of an economy, but Doing Business. Since 2003, when the Doing combine Doing Business data with data in significantly different ways. The scope of Business report was first published, 2,182 Doing Business is narrower than the Enterprise research articles discussing how regulation from other sources to assess an economy Surveys. However, by focusing on actionable in the areas measured by Doing Business along a particular aggregate dimension indicators related to business regulation, influences economic outcomes have been such as competitiveness or innovation. Doing Business provides a clear roadmap published in peer-reviewed academic journals, for governments to improve. Doing Business Another 6,296 working papers have been The Heritage Foundation’s Index of uses standardized case scenarios while the posted online. Economic Freedom, for example, has Enterprise Surveys use representative samples. 11. Miriam Bruhn, “License to Sell: The used six Doing Business indicators to mea- For more on the Enterprise Surveys and the Effect of Business Registration Reform on differences between the Enterprise Surveys and Entrepreneurial Activity in Mexico.” Review of sure the degree of economic freedom in Doing Business, see the website at http:/ /www Economics and Statistics 93, no. 1 (2011): 382- the world.33 Economies that score better .enterprisesurveys.org. 86. in these six areas also tend to have a high 3. These papers are available on the Doing 12. Miriam Bruhn, “A Tale of Two Species: Business website at http:/ /www.doingbusiness Revisiting the Effect of Registration Reform on degree of economic freedom. .org/methodology. Informal Business Owners in Mexico.” Journal 4. For getting credit, indicators are weighted of Development Economics 103 (2013): 275-83. Similarly, the World Economic Forum proportionally, according to their contribution 13. Lee G. Branstetter, Francisco Lima, Lowell to the total score, with a weight of 60% J. Taylor and Ana Venâncio, “Do Entry uses Doing Business data in its Global assigned to the strength of legal rights index Regulations Deter Entrepreneurship and Job Competitiveness Index to demonstrate and 40% to the depth of credit information Creation? Evidence from Recent Reforms how competitiveness is a global driver index. In this way each point included in these in Portugal.” Economic Journal. Published indexes has the same value independent of electronically July 16, 2013. doi:10.1111// of economic growth. The organization the component it belongs to. Indicators for all ecoj.12044. also uses Doing Business indicators in four other topics are assigned equal weights. 14. Alberto Portugal-Perez and John S. Wilson, other indexes that measure technological 5. See Simeon Djankov, Darshini Manraj, Caralee “Export Performance and Trade Facilitation McLiesh and Rita Ramalho, “Doing Business Reform: Hard and Soft Infrastructure.” World readiness, human capital development, Indicators: Why Aggregate, and How to Do Development 40, no. 7 (2011): 1295-1307. travel and tourism sector competitive- It” (World Bank, Washington, DC, 2005). 15. Caroline Freund and Nadia Rocha, “What ness and trade facilitation. These publicly Principal components and unobserved Constrains Africa’s Exports?” The World Bank components methods yield a ranking nearly Economic Review 25, no. 3 (2011): 361-86. accessible sources expand the general identical to that from the simple average 16. Simeon Djankov, Caroline Freund and Cong S. business environment data generated by method because both these methods assign Pham, “Trading on Time.” Review of Economics Doing Business by incorporating it into roughly equal weights to the topics, since the and Statistics 92, no. 1 (2010): 166-73. pairwise correlations among indicators do 17. Christian Volpe Martincus, Jeronimo Carballo the study of other important social and not differ much. An alternative to the simple and Alejandro Graziano, “Customs.” Journal of economic issues across economies and average method is to give different weights to International Economics 96 (2015): 119-37. 96 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 18. Caroline Freund and Bineswaree Bolaky, Tourism Competitiveness Index (TTCI); “Trade, Regulations, and Income.” Journal of INSEAD’s Global Talent Competitiveness Development Economics 87 (2008): 309-21. Index (GTCI) and Global Innovation Index 19. Mary Amiti and Amit K. Khandelwal, “Import (GII, jointly with Cornell University and the Competition and Quality Upgrading.” Review of World Intellectual Property Organization); Statistics and Economics 95, no. 2 (2011): 476- Fraser Institute’s Economic Freedom of the 90. World (EFW); KPMG’s Change Readiness 20. Adrian Corcoran and Robert Gillanders, Index (CRI); Citi and Imperial College “Foreign Direct Investment and the Ease of London’s Digital Money Index; International Doing Business.” Review of World Economics Institute for Management Development’s 151, no. 1 (2015): 103-26. World Competitiveness Yearbook; DHL’s 21. Jonathan Munemo, “Business Start-Up Global Connectedness Index (GCI); Regulations and the Complementarity PricewaterhouseCoopers’ Paying Taxes 2016; Between Foreign and Domestic Investment.” The Global Picture; and Legatum Institute’s Review of World Economics 150, no. 4 (2014): Legatum Prosperity Index. 745-61. 33. For more on the Heritage Foundation’s Index 22. Pehr-Johan Norbäck, Lars Persson, and of Economic Freedom, see the website at Robin Douhan, “Entrepreneurship Policy http:/ /heritage.org/index. and Globalization.” Journal of Development Economics 110 (2014): 22-38. 23. Xavier Giné and Inessa Love. “Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia.” Journal of Law and Economics 53, no. 4 (2010): 833-64. 24. Inessa Love, María Soledad Martínez Pería and Sandeep Singh, “Collateral Registries for Movable Assets: Does Their Introduction Spur Firms’ Access to Bank Finance?” Policy Research Working Paper 6477 (World Bank, Washington, DC, 2013). 25. Sujata Visaria, “Legal Reform and Loan Repayment: The Microeconomic Impact of Debt Recovery Tribunals in India.” American Economic Journal: Applied Economics 1, no. 3 (2009): 59-81. 26. Thorsten Beck, Chen Lin and Yue Ma, “Why Do Firms Evade Taxes? The Role of Information Sharing and Financial Sector Outreach.” Journal of Finance 69 (2014): 763- 817. 27. Stijn Claessens, Kenichi Ueda and Yishay Yafeh, “Institutions and Financial Frictions: Estimating with Structural Restrictions on Firm Value and Investment.” Journal of Development Economics 110 (2014): 107-22. 28. Joana Monteiro and Juliano J. Assunção, “Coming Out of the Shadows? Estimating the Impact of Bureaucracy Simplification and Tax Cut on Formality in Brazilian Microenterprises.” Journal of Development Economics 99 (2012): 105-15. 29. Martina Lawless, “Do Complicated Tax Systems Prevent Foreign Direct Investment?” Economica 80, 317 (2013): 1-22. 30. Daiji Kawaguchi and Tetsushi Murao, “Labor- Market Institutions and Long-Term Effects of Youth Unemployment.” Journal of Money Credit and Banking 46, S2 (2014): 95-116. 31. Claudio Montenegro and Carmen Pagés, “Who Benefits from Labor Market Regulations?” Policy Research Working Paper 3143 (World Bank, Washington DC, 2003). 32. The 17 indexes are : the Millennium Challenge Corporation’s Open Data Catalog; the Heritage Foundation’s Index of Economic Freedom (IEF); the World Economic Forum’s Global Competitiveness Index (GCI), Networked Readiness Index (NRI, jointly with INSEAD), Human Capital Index (HCI), Enabling Trade Index (ETI) and Travel and 97 Data Notes T he indicators presented and Business questionnaires for the specific assumptions are used in the data col- analyzed in Doing Business in the study in Bulgaria, Hungary and Romania lection, comparisons and benchmarks European Union 2017: Bulgaria, and translated them into Bulgarian, are valid across locations. Finally, the Hungary and Romania measure busi- Hungarian and Romanian. The question- data not only highlight the extent of ness regulation and the protection naires use a simple business case to specific regulatory obstacles to busi- of property rights—and their effect ensure comparability across locations ness but also identify their source and on businesses, especially small and and economies and over time—with point to what might be reformed. medium-size domestic firms. First, the assumptions about the legal form of the indicators document the complexity business, its size, its location and the of regulation, such as the number of nature of its operations. Questionnaires LIMITS TO WHAT IS procedures to start a business or to reg- were administered to local experts, MEASURED ister a transfer of commercial property. including lawyers, business consultants, Second, they gauge the time and cost architects, engineers, public officials, The Doing Business methodology has four to achieve a regulatory goal or comply magistrates and other professionals limitations that should be considered with regulation, such as the time and routinely administering or advising on when interpreting the data. First, the data cost to enforce a contract. Third, they legal and regulatory requirements. These often focus on a specific business form— measure the extent of legal protections, experts had several rounds of interaction generally a limited liability company for example, the protections of property with the project team, involving confer- (or its legal equivalent) of a specified rights. ence calls, written correspondence and size—and may not be representative of visits by the team. The data from ques- the regulation on other businesses (for This report presents Doing Business tionnaires were subjected to numerous example, sole proprietorships). Second, indicators for 22 cities in Bulgaria, rounds of verification, leading to revi- transactions described in a standardized Hungary and Romania. The data for all sions or expansions of the information case scenario refer to a specific set of sets of indicators in Doing Business in the collected. issues and may not represent the full European Union 2017: Bulgaria, Hungary set of issues that a business encounters. and Romania are current as of December The Doing Business methodology offers Third, the measures of time involve 31, 2016. The data for Sofia, Budapest, several advantages. It is transparent, an element of judgment by the expert Bucharest and 187 other economies using factual information about what respondents. When sources indicate used for comparison are based on the laws and regulations say and allow- different estimates, the time indicators indicators in Doing Business 2017: Equal ing multiple interactions with local reported in Doing Business represent the Opportunity for All, the 14th in a series of respondents to clarify potential mis- median values of several responses given annual reports published by the World interpretations of questions. Having under the assumptions of the standard- Bank Group. representative samples of respondents ized case. is not an issue; Doing Business is not a statistical survey, and the texts of the Finally, the methodology assumes that a METHODOLOGY relevant laws and regulations are col- business has full information on what is lected and answers checked for accu- required and does not waste time when The Doing Business in the European Union racy. The methodology is inexpensive completing procedures. In practice, com- 2017: Bulgaria, Hungary and Romania data and easily replicable, so data can be pleting a procedure may take longer if the were collected in a standardized way. collected in a large sample of locations business lacks information or is unable To start, the team customized the Doing and economies. Because standard to follow up promptly. Alternatively, 98 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Economy characteristics Gross national income per capita Doing Business in the European Union 2017: Bulgaria, Hungary and Romania reports 2015 income per capita as published in the World Bank’s World Development Indicators 2016. Income is calculated using the Atlas method (in current U.S. dollars). For cost indicators expressed as a percentage of income per capita, 2015 gross national income (GNI) per capita in current U.S. dollars is used as the denominator. Bulgaria’s income per capita for 2015 is US$7,220 (BGN 11,534), Hungary’s income per capita is US$12,990 (HUF 3,296,327) and Romania’s income per capita is US$9,500 (RON 35,109). Region and income group Doing Business uses the World Bank regional and income group classifications, available at http://data.worldbank.org/about /country-and-lending-groups. Regional averages presented in figures and tables in the Doing Business in the European Union 2017: Bulgaria, Hungary and Romania report include economies from all income groups (low, lower middle, upper middle and high income). Exchange rates The exchange rate for the US dollar used in the Doing Business in the European Union 2017: Bulgaria, Hungary and Romania report is: US$1 = 1.5975 Bulgarian Leva (BGN), US$1 = 253.7588 Hungarian Forints (HUF) and US$1 = 3.6957 Romanian Leu (RON). The exchange rate for the Euro used in the report is the rate of the European Central Bank as of December 30, 2016: EUR 1 = BGN 1.9558, EUR 1 = HUF 309.83 and EUR 1 = RON 4.539. the business may choose to disregard when obtaining all necessary approvals, some burdensome procedures. For both STARTING A BUSINESS licenses and permits and completing reasons the time delays reported in Doing any required notifications, verifications Business would differ from the recollec- Doing Business records all procedures or inscriptions for the company and tion of entrepreneurs reported in the officially required, or commonly done in employees with relevant authorities. World Bank Enterprise Surveys or other practice, for an entrepreneur to start up firm-level surveys. and formally operate an industrial or com- The ranking of locations on the ease of mercial business, as well as the time and starting a business is determined by sorting cost to complete these procedures and their distance to frontier scores for starting CHANGES IN WHAT IS the paid-in minimum capital requirement a business. These scores are the simple MEASURED (figure 9.1). These procedures include average of the distance to frontier scores for the processes entrepreneurs undergo each of the component indicators (figure In the Doing Business 2017 report, three indicator sets (starting a business, registering property and enforcing con- FIGURE 9.1  What are the time, cost, paid-in minimum capital and number of procedures to get a local limited liability company up and running? tracts) were expanded to cover a gender dimension, in addition to labor market Cost regulation, which was expanded last year. (% of income per capita) Starting a business was expanded to also Formal operation measure the process of starting a busi- ness when all shareholders are women. Paid-in Registering property now also measures $ Number of minimum capital procedures equality in ownership rights to property. And enforcing contracts was expanded to measure equality in evidentiary weight for men and women. Despite these Entrepreneur changes in methodology introduced in Time Preregistration Registration, Postregistration (days) the Doing Business 2017 report, the data incorporation under the old and new methodologies are highly correlated.1 DATA NOTES 99 9.2). The distance to frontier score shows be completed and whether procedures majority, they are assumed to be 30 the distance of an economy or location to may be carried out simultaneously. It is years old. the “frontier,” which is derived from the assumed that any required information ƒƒ Are sane, competent and in good most efficient practice or highest score is readily available and that the entre- health and have no criminal record. achieved on each indicator. preneur will pay no bribes. If answers ƒƒ Are married and their marriages are by local experts differ, inquiries continue monogamous and registered with the Two types of local liability companies until the data are reconciled. authorities. are considered under the starting a busi- ness methodology. They are identical in To make the data comparable across Procedures all aspects, except that one company is locations, several assumptions about the A procedure is defined as any interaction owned by five married women and the businesses and the procedures are used. of the company founders with external other by five married men. The distance parties (for example, government agen- to frontier score for each indicator is the Assumptions about the business cies, lawyers, auditors or notaries) or average of the scores obtained for each The business: spouses (if legally required). Interactions of the component indicators for both of ƒƒ Is a limited liability company (or its between company founders or company these standardized companies. legal equivalent). officers and employees are not counted ƒƒ Operates in the selected city. as procedures. Procedures that must be After a study of laws, regulations and ƒƒ Is 100% domestically owned and has completed in the same building but in dif- publicly available information on busi- five owners, none of whom is a legal ferent offices or at different counters are ness entry, a detailed list of procedures entity. counted as separate procedures. If found- is developed, along with the time and ƒƒ Has start-up capital of 10 times ers have to visit the same office several cost to comply with each procedure income per capita. times for different sequential procedures, under normal circumstances and the ƒƒ Performs general industrial or com- each is counted separately. The founders paid-in minimum capital requirement. mercial activities, such as the produc- are assumed to complete all procedures Subsequently, local incorporation law- tion or sale to the public of products themselves, without middlemen, facilita- yers, notaries and government officials or services. The business does not tors, accountants or lawyers, unless the complete and verify the data. perform foreign trade activities and use of such a third party is mandated by does not handle products subject to a law or solicited by the majority of entre- Information is also collected on the special tax regime, for example, liquor preneurs. If the services of professionals sequence in which procedures are to or tobacco. It is not using heavily pol- are required, procedures conducted by luting production processes. such professionals on behalf of the com- FIGURE 9.2  Starting a business: getting ƒƒ Leases the commercial plant or pany are counted as separate procedures. a local limited liability company up and offices and is not a proprietor of real Each electronic procedure is counted as running estate. The amount of the annual a separate procedure. Obtaining approval Rankings are based on distance to lease for the office space is equivalent from a spouse to own a business or leave frontier scores for four indicators to 1 times income per capita. the home is considered a procedure if it 25% Time 25% Cost ƒƒ The size of the entire office space is is required by law or if by failing to do so Preregistration, As % of income approximately 929 meters (10,000 an individual will suffer consequences registration and per capita, no postregistration bribes included square feet). under the law, such as the loss of rights (in calendar days) ƒƒ Does not qualify for investment to financial maintenance. Documents or 12.5% 12.5% incentives or any special benefits. permissions required for only one gender women men ƒƒ Has at least 10 and up to 50 employ- for registering and operating a company, 12.5% men 12.5% women ees one month after the commence- opening a bank account or obtaining a 12.5% 25% ment of operations, all of them national identification card are consid- women Paid-in minimum domestic nationals. ered additional procedure. 12.5% capital men ƒƒ Has a turnover of at least 100 times income per capita. Both pre- and postincorporation pro- 25% Paid-in 25% Procedures minimum capital ƒƒ Has a company deed 10 pages long. cedures that are officially required or Procedures are Funds deposited in a commonly done in practice for an entre- completed when bank or with a notary final document before registration (or The owners: preneur to formally operate a business are is received up to three months after ƒƒ Have reached the legal age of majority recorded (table 9.1). Any interaction with incorporation), as % of income per capita and are capable of making decisions an external party within three months of as an adult. If there is no legal age of registration is considered a procedure, 100 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA TABLE 9.1  What do the starting four criteria: they are legal, they are avail- that the entrepreneur is aware of all a business indicators measure? able to the general public, they are used entry requirements and their sequence by the majority of companies, and avoid- from the beginning but has had no prior Procedures to legally start and formally operate a company (number) ing them causes delays. contact with any of the officials involved. Preregistration (for example, name verification or reservation, notarization) Only procedures required of all busi- Cost Registration in the selected city nesses are covered. Industry-specific Cost is recorded as a percentage of the Postregistration (for example, social security procedures are excluded. For example, economy’s income per capita. It includes registration, company seal) procedures to comply with environmental all official fees and fees for legal or Obtaining approval from spouse to start a regulations are included only when they professional services if such services business, to leave the home to register the apply to all businesses conducting gen- are required by law or commonly used company, or to open a bank account eral commercial or industrial activities. in practice. Fees for purchasing and Obtaining any gender-specific document for company registration and operation, national Procedures that the company undergoes legalizing company books are included identification card or opening a bank account to connect to electricity, water, gas and if these transactions are required by law. Time required to complete each procedure waste disposal services are not included Although value added tax registration (calendar days) in the starting a business indicators. can be counted as a separate procedure, Does not include time spent gathering value added tax is not part of the incorpo- information Time ration cost. The company law, the com- Each procedure starts on a separate day Time is recorded in calendar days. mercial code, and specific regulations (two procedures cannot start on the same day)— though procedures that can be fully completed The measure captures the median and fee schedules are used as sources online are an exception to this rule duration that incorporation lawyers for calculating costs. In the absence of Registration process considered completed once or notaries indicate is necessary in fee schedules, a government officer’s final incorporation document is received or company can officially start operating practice to complete a procedure with estimate is taken as an official source. No prior contact with officials takes place minimum follow-up with government In the absence of a government officer’s agencies and no unofficial payments. estimate, estimates by incorporation Cost required to complete each procedure (% of income per capita) It is assumed that the minimum time lawyers are used. If several incorporation Official costs only, no bribes required for each procedure is one lawyers provide different estimates, the day, except for procedures that can be median reported value is applied. In all No professional fees unless services required by law or commonly used in practice fully completed online, for which the cases the cost excludes bribes. Paid-in minimum capital (% of income per time required is recorded as half a day. capita) Although procedures may take place Paid-in minimum capital Funds deposited in a bank or with a notary simultaneously, they cannot start on the The paid-in minimum capital requirement before registration (or up to three months after same day (that is, simultaneous proce- reflects the amount that the entrepreneur incorporation) dures start on consecutive days), again needs to deposit in a bank or with a notary with the exception of procedures that before registration or up to three months except value added tax or goods and can be fully completed online. A regis- after incorporation and is recorded as a services tax registration which is counted tration process is considered completed percentage of the economy’s income per whenever the assumed turnover exceeds once the company has received the final capita. The amount is typically specified the determined threshold. incorporation document or can officially in the commercial code or the company commence business operations. If a pro- law. Many economies require minimum Procedures required for official cor- cedure can be accelerated legally for an capital but allow businesses to pay only a respondence or transactions with public additional cost, the fastest procedure is part of it before registration, with the rest agencies are also included. For example, chosen if that option is more beneficial to be paid after the first year of opera- if a company seal or stamp is required to the province’s ranking. For obtaining tion. In Turkey in June 2015, for example, on official documents, such as tax dec- a spouse’s approval, it is assumed that the minimum capital requirement was larations, obtaining the seal or stamp is permission is granted at no additional 10,000 Turkish liras, of which one-fourth counted. Similarly, if a company must cost unless the permission needs to needed to be paid before registration. open a bank account in order to complete be notarized. It is assumed that the The paid-in minimum capital recorded any subsequent procedure—such as reg- entrepreneur does not waste time and for Turkey is therefore 2,500 Turkish liras, istering for value added tax or showing commits to completing each remaining or 10.2% of income per capita. proof of minimum capital deposit—this procedure without delay. The time that transaction is included as a procedure. the entrepreneur spends on gathering The data details on starting a business can Shortcuts are counted only if they fulfill information is ignored. It is assumed be found at http://www.doingbusiness DATA NOTES 101 .org. This methodology was developed by example, building plans, site maps FIGURE 9.3  Dealing with construction Simeon Djankov, Rafael La Porta, Florencio and certificates of urbanism) to the permits: efficiency and quality of building López-de-Silanes and Andrei Shleifer (“The authorities. regulation Regulation of Entry,” Quarterly Journal of ƒƒ Hiring external third-party supervi- Rankings are based on distance to Economics 117, no. 1 [2002]: 1–37) and is sors, engineers or inspectors (if frontier scores for four indicators adopted here with minor changes. necessary). ƒƒ Obtaining all necessary clearances, Days to comply Cost to comply with formalities with formalities, licenses, permits and certificates. to build a as % of warehouse warehouse value ƒƒ Submitting all required notifications. DEALING WITH ƒƒ Requesting and receiving all neces- CONSTRUCTION PERMITS sary inspections (unless completed by a private, third-party inspector). 25% 25% Time Cost Doing Business records all procedures 25% 25% required for a business in the construc- Doing Business also records procedures Procedures Building quality tion industry to build a warehouse along for obtaining connections for water and control index with the time and cost to complete each sewerage. Procedures necessary to regis- procedure. In addition, Doing Business ter the warehouse so that it can be used Steps to comply Quality of building with formalities; regulation and its measures the building quality control as collateral or transferred to another completed when implementation index, evaluating the quality of build- entity are also counted. final document is received ing regulations, the strength of quality control and safety mechanisms, liability To make the data comparable across and insurance regimes, and professional locations, several assumptions about the ƒƒ Is fully licensed and insured to carry certification requirements. Information is construction company, the warehouse out construction projects, such as collected through a questionnaire admin- project and the utility connections are building warehouses. istered to experts in construction licens- used. ƒƒ Has 60 builders and other employees, ing, including architects, civil engineers, all of them nationals with the techni- construction lawyers, construction firms, Assumptions about the cal expertise and professional experi- utility service providers and public offi- construction company ence necessary to obtain construction cials who deal with building regulations, The construction company (BuildCo): permits and approvals. including approvals, permit issuance and ƒƒ Is a limited liability company (or its ƒƒ Has a licensed architect and a licensed inspections. legal equivalent). engineer both registered with the local ƒƒ Operates in the selected city. association of architects or engineers. The ranking of locations on the ease ƒƒ Is 100% domestically and privately BuildCo is not assumed to have any of dealing with construction permits is owned. other employees who are technical or determined by sorting their distance to ƒƒ Has five owners, none of whom is a licensed experts, such as geological or frontier scores for dealing with construc- legal entity. topographical experts. tion permits. These scores are the simple average of the distance to frontier scores FIGURE 9.4  What are the time, cost and number of procedures to comply with for each of the component indicators formalities to build a warehouse? (figure 9.3). Cost (% of warehouse value) EFFICIENCY OF CONSTRUCTION PERMITTING Completed warehouse Doing Business divides the process of building a warehouse into distinct pro- Number of cedures in the questionnaire and solicits procedures data for calculating the time and cost to complete each procedure (figure 9.4). A business in the These procedures include but are not construction industry Time limited to: (days) Preconstruction Construction Postconstruction ƒƒ Obtaining and submitting all rel- and utilities evant project-specific documents (for 102 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA ƒƒ Has paid all taxes and taken out all ƒƒ Will take 30 weeks to construct the plans and drawings (such as obtain- necessary insurance applicable to its (excluding all delays due to adminis- ing topographic or geological surveys), general business activity (for example, trative and regulatory requirements). or to have such documents approved accidental insurance for construction or stamped by external parties, are workers and third-person liability). Assumptions about the utility counted as procedures. Procedures that ƒƒ Owns the land on which the ware- connections the company undergoes to connect the house will be built and will sell the The water and sewerage connections: warehouse to water and sewerage are warehouse upon its completion. ƒƒ Will be 150 meters (492 feet) from included. All procedures that are legally the existing water source and sewer required, or that are done in practice by Assumptions about the tap. If there is no water delivery infra- the majority of companies, to build a warehouse structure in the location, a borehole warehouse are counted, even if they may The warehouse: will be dug. If there is no sewerage be avoided in exceptional cases. This ƒƒ Will be used for general storage infrastructure, a septic tank in the includes obtaining technical conditions activities, such as storage of books or smallest size available will be installed for electricity or clearance of the electrical stationery. The warehouse will not be or built. plans only if they are required to obtain a used for any goods requiring special ƒƒ Will not require water for fire protec- building permit (table 9.2). conditions, such as food, chemicals or tion reasons; a fire extinguishing pharmaceuticals. system (dry system) will be used Time ƒƒ Will have two stories, both above instead. If a wet fire protection system Time is recorded in calendar days. The ground, with a total constructed area is required by law, it is assumed that measure captures the median duration of approximately 1,300.6 square the water demand specified below that local experts indicate is necessary meters (14,000 square feet). Each also covers the water needed for fire to complete a procedure in practice. It is floor will be 3 meters (9 feet, 10 protection. assumed that the minimum time required inches) high. ƒƒ Will have an average water use of for each procedure is one day, except for ƒƒ Will have road access and be located 662 liters (175 gallons) a day and an procedures that can be fully completed in the periurban area of the selected average wastewater flow of 568 liters online, for which the time required is city (that is, on the fringes of the city (150 gallons) a day. Will have a peak but still within its official limits). water use of 1,325 liters (350 gallons) TABLE 9.2  What do the indicators on ƒƒ Will not be located in a special eco- a day and a peak wastewater flow of the efficiency of construction permitting nomic or industrial zone. 1,136 liters (300 gallons) a day. measure? ƒƒ Will be located on a land plot of ƒƒ Will have a constant level of water Procedures to legally build a warehouse approximately 929 square meters demand and wastewater flow (number) (10,000 square feet) that is 100% throughout the year. Submitting all relevant documents and obtaining owned by BuildCo and is accurately ƒƒ Will be 1 inch in diameter for the water all necessary clearances, licenses, permits and certificates registered in the cadastre and land connection and 4 inches in diameter registry. for the sewerage connection. Submitting all required notifications and receiving all necessary inspections ƒƒ Is valued at 50 times income per Obtaining utility connections for water and capita. Procedures sewerage ƒƒ Will be a new construction (there was A procedure is any interaction of the Registering the warehouse after its completion no previous construction on the land), company’s employees or managers, or (if required for use as collateral or for transfer of with no trees, natural water sources, any party acting on behalf of the com- the warehouse) natural reserves or historical monu- pany, with external parties, including Time required to complete each procedure (calendar days) ments of any kind on the plot. government agencies, notaries, the land ƒƒ Will have complete architectural registry, the cadastre, utility companies Does not include time spent gathering information and technical plans prepared by a and public inspectors—and the hiring of Each procedure starts on a separate day— licensed architect. If preparation of external private inspectors and techni- though procedures that can be fully completed the plans requires such steps as cal experts where needed. Interactions online are an exception to this rule obtaining further documentation or between company employees, such as Procedure considered completed once final development of the warehouse plans and document is received getting prior approvals from exter- nal agencies, these are counted as inspections conducted by employees, No prior contact with officials procedures. are not counted as procedures. However, Cost required to complete each procedure (% of warehouse value) ƒƒ Will include all technical equipment interactions with external parties that required to be fully operational. are required for the architect to prepare Official costs only, no bribes DATA NOTES 103 recorded as half a day. Although proce- construction, liability and insurance TABLE 9.3  What do the indicators on dures may take place simultaneously, regimes, and professional certifications building quality control measure? they cannot start on the same day (that indices (table 9.3). The indicator is based Quality of building regulations index (0–2) is, simultaneous procedures start on on the same case study assumptions as Accessibility of building regulations consecutive days), again with the excep- the measures of efficiency. tion of procedures that can be fully Clarity of requirements for obtaining a building permit completed online. If a procedure can be Quality of building regulations Quality control before construction index accelerated legally for an additional cost index (0–1) and the accelerated procedure is used The quality of building regulations index Whether licensed or technical experts approve by the majority of companies, the fast- has two components: building plans est procedure is chosen. It is assumed ƒƒ Whether building regulations are eas- Quality control during construction index that BuildCo does not waste time and ily accessible. A score of 1 is assigned (0–3) commits to completing each remaining if any building regulations (including Types of inspections legally mandated during procedure without delay. The time that the building code) or any regulations construction BuildCo spends on gathering information dealing with construction permits are Implementation of legally mandated inspections in practice is not taken into account. It is assumed available on a website that is updated Quality control after construction index that BuildCo is aware of all building as soon as the regulations change; 0.5 (0–3) requirements and their sequence from if the building regulations are avail- Final inspection legally mandated after the beginning. able free of charge (or for a nominal construction fee) at the relevant permit-issuing Implementation of legally mandated final Cost authority; 0 if the building regulations inspection in practice Cost is recorded as a percentage of are distributed to building profession- Liability and insurance regimes index (0–2) the warehouse value (assumed to be als through an official gazette free of Parties held legally liable for structural flaws after 50 times income per capita). Only charge (or for a nominal fee), if they building occupancy official costs are recorded. All the fees must be purchased or if they are not Parties legally mandated to obtain insurance to associated with completing the proce- made easily accessible anywhere. cover structural flaws after building occupancy or insurance commonly obtained in practice dures to legally build a warehouse are ƒƒ Whether the requirements for obtain- Professional certifications index (0–4) recorded, including those associated ing a building permit are clearly with obtaining land use approvals and specified. A score of 1 is assigned if Qualification requirements for individual who approves building plans preconstruction design clearances; the building regulations (including Qualification requirements for individual who receiving inspections before, during and the building code) or any acces- supervises construction or conducts inspections after construction; obtaining utility con- sible website, brochure or pamphlet Building quality control index (0–15) nections; and registering the warehouse clearly specifies the list of required Sum of the quality of building regulations, quality property. Nonrecurring taxes required documents to submit, the fees to be control before construction, quality control during for the completion of the warehouse paid and all required preapprovals of construction, quality control after construction, project are also recorded. Sales taxes the drawings or plans by the relevant liability and insurance regimes, and professional certifications indices (such as value added tax) or capital agencies; 0 if none of these sources gains taxes are not recorded. Nor are specify any of these requirements or if deposits that must be paid up front and these sources specify fewer than the a score of 2 on the quality of building are later refunded. The building code, three requirements. regulations index. information from local experts, and spe- cific regulations and fee schedules are The index ranges from 0 to 2, with Quality control before used as sources for costs. If several local higher values indicating clearer and construction index partners provide different estimates, the more transparent building regulations. The quality control before construction median reported value is used. In the United Kingdom, for example, all index has one component: relevant legislation can be found on an ƒƒ Whether by law a licensed architect BUILDING QUALITY CONTROL official government website (a score of or licensed engineer is part of the 1). The legislation specifies the list of committee or team that reviews and The building quality control index is required documents to submit, the fees approves building permit applications based on six other indices—the quality to be paid and all required preapprovals and whether that person has the of building regulations, quality control of the drawings or plans by the relevant authority to refuse an application. A before construction, quality control dur- agencies (a score of 1). Adding these score of 1 is assigned if the national ing construction, quality control after numbers gives the United Kingdom association of architects or engineers 104 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA (or its equivalent) must review the score of 0 is assigned if a government building has been built in accordance building plans, if an independent firm agency is legally mandated to conduct with the approved plans and existing or expert who is a licensed architect or unscheduled inspections, or if no tech- building regulations. engineer must review the plans, if the nical inspections are mandated by law. ƒƒ Whether the final inspection is imple- architect or engineer who prepared ƒƒ Whether inspections during con- mented in practice. A score of 1 is the plans must submit an attestation struction are implemented in practice. assigned if the legally mandated final to the permit-issuing authority stating A score of 1 is assigned if the legally inspection after construction always that the plans are in compliance with mandated inspections during con- occurs in practice or if a supervis- the building regulations or if a licensed struction always occur in practice; 0 ing engineer or firm attests that the architect or engineer is part of the if the legally mandated inspections do building has been built in accordance committee or team that approves the not occur in practice, if the inspections with the approved plans and existing plans at the relevant permit-issuing occur most of the time but not always building regulations; 0 if the legally authority; 0 if no licensed architect or or if inspections are not mandated by mandated final inspection does not engineer is involved in the review of law regardless of whether or not they occur in practice, if the legally man- the plans to ensure their compliance commonly occur in practice. dated final inspection occurs most with building regulations. of the time but not always or if a final The index ranges from 0 to 3, with higher inspection is not mandated by law The index ranges from 0 to 1, with higher values indicating better quality control regardless of whether or not it com- values indicating better quality control during the construction process. In monly occurs in practice. in the review of the building plans. In Antigua and Barbuda, for example, the Rwanda, for example, the City Hall in Development Control Authority is legally The index ranges from 0 to 3, with Kigali must review the building permit mandated to conduct phased inspections higher values indicating better quality application, including the plans and draw- under the Physical Planning Act of 2003 control after the construction process. ings, and both a licensed architect and a (a score of 1). However, the Development In Haiti, for example, the Municipality licensed engineer are part of the team Control Authority rarely conducts these of Port-au-Prince is legally mandated that reviews the plans and drawings. inspections in practice (a score of 0). to conduct a final inspection under the Rwanda therefore receives a score of 1 Adding these numbers gives Antigua and national Building Code of 2012 (a score on the quality control before construction Barbuda a score of 1 on the quality control of 2). However, most of the time the final index. during construction index. inspection does not occur in practice (a score of 0). Adding these numbers gives Quality control during Quality control after construction Haiti a score of 2 on the quality control construction index index after construction index. The quality control during construction The quality control after construction index has two components: index has two components: Liability and insurance regimes ƒƒ Whether inspections are mandated by ƒƒ Whether a final inspection is man- index law during the construction process. dated by law in order to verify that The liability and insurance regimes index A score of 2 is assigned if an in-house the building was built in accordance has two components: supervising engineer (for example, an with the approved plans and existing ƒƒ Whether any parties involved in employee of the building company), an building regulations. A score of 2 is the construction process are held external supervising engineer or a gov- assigned if an in-house supervising legally liable for latent defects such ernment agency is legally mandated engineer (that is, an employee of as structural flaws or problems in to conduct risk-based inspections. A the building company), an external the building once it is in use. A score score of 1 is assigned if an in-house supervising engineer or an external of 1 is assigned if at least two of the supervising engineer (that is, an inspections firm is legally mandated following parties are held legally liable employee of the building company), to verify that the building has been for structural flaws or problems in the an external supervising engineer or an built in accordance with the approved building once it is in use: the architect external inspections firm is legally man- plans and existing building regulations or engineer who designed the plans dated to conduct technical inspections or if a government agency is legally for the building, the professional in at different stages during the construc- mandated to conduct a final inspec- charge of supervising the construc- tion of the building or if a government tion upon completion of the building; tion, the professional or agency that agency is legally mandated to conduct 0 if no final inspection is mandated conducted the inspections or the only technical inspections at different by law after construction and no third construction company; 0.5 if one of stages during the construction. A party is required to verify that the the parties is held legally liable for DATA NOTES 105 structural flaws or problems in the article 1792 of the Civil Code both the have a university degree (a minimum building once it is occupied; 0 if no architect who designed the plans and the of a bachelor’s) in architecture or engi- party is held legally liable for struc- construction company are held legally neering and must also either be a reg- tural flaws or problems in the building liable for latent defects for a period of 10 istered member of the national order once it is in use, if the project owner or years after the completion of the building of engineers or pass a qualification investor is the only party held liable, if (a score of 1). However, there is no legal exam. A score of 1 is assigned if the liability is determined in the court or if requirement for any party to obtain a professional must have a university liability is stipulated in a contract. decennial liability insurance policy to degree (a minimum of a bachelor’s) in ƒƒ Whether any parties involved in the cover structural defects, nor do most par- architecture or engineering and must construction process is legally required ties obtain such insurance in practice (a also either have a minimum number to obtain a latent defect liability—or score of 0). Adding these numbers gives of years of practical experience or be decennial (10-year) liability—insur- Madagascar a score of 1 on the liability a registered member of the national ance policy to cover possible structural and insurance regimes index. order (association) of engineers or flaws or problems in the building once pass a qualification exam. A score of it is in use. A score of 1 is assigned if the Professional certifications index 0 is assigned if the professional must architect or engineer who designed the The professional certifications index has meet only one of the requirements, if plans for the building, the professional two components: the professional must meet two of the or agency that conducted the technical ƒƒ The qualification requirements for requirements but neither of the two is inspections, the construction com- the professional responsible for to have a university degree, or if the pany, or the project owner or investor verifying that the architectural plans professional is subject to no qualifica- is required by law to obtain either a or drawings are in compliance with tion requirements. decennial liability insurance or a latent the building regulations. A score of 2 defect liability insurance policy to is assigned if this professional must The index ranges from 0 to 4, with higher cover possible structural flaws or prob- have a minimum number of years of values indicating greater professional lems in the building once it is in use practical experience, must have a uni- certification requirements. In Cambodia, or if a decennial liability insurance or versity degree (a minimum of a bach- for example, the professional responsible latent defect liability insurance policy elor’s) in architecture or engineering for verifying that the architectural plans is commonly obtained in practice by and must also either be a registered or drawings are in compliance with the the majority of any of these parties member of the national order (asso- building regulations must have a relevant even if not required by law; a score of ciation) of architects or engineers or university degree and must pass a quali- 0 is assigned if no party is required by pass a qualification exam. A score of fication exam (a score of 1). However, the law to obtain either a decennial liabil- 1 is assigned if the professional must professional supervising construction ity insurance or a latent defect liability have a university degree (a minimum must only have a university degree (a insurance and such insurance is not of a bachelor’s) in architecture or score of 0). Adding these numbers gives commonly obtained in practice by engineering and must also either Cambodia a score of 1 on the professional any party, if the requirement to obtain have a minimum number of years of certifications index. an insurance policy is stipulated in a practical experience or be a registered contract, if any party must obtain a member of the national order (asso- Building quality control index professional insurance policy to cover ciation) of architects or engineers or The building quality control index is the the safety of workers or any other pass a qualification exam. A score of sum of the scores on the quality of build- defects during construction but not a 0 is assigned if the professional must ing regulations, quality control before decennial liability insurance or latent meet only one of the requirements, if construction, quality control during con- defect liability insurance policy that the professional must meet two of the struction, quality control after construc- would cover defects after the building requirements but neither of the two is tion, liability and insurance regimes, and is in use, or if any party is required to to have a university degree, or if the professional certifications indices. The pay for any damages caused on their professional is subject to no qualifica- index ranges from 0 to 15, with higher own without having to obtain an insur- tion requirements. values indicating better quality control ance policy. ƒƒ The qualification requirements for the and safety mechanisms in the construc- professional who conducts the tech- tion regulatory system. The index ranges from 0 to 2, with higher nical inspections during construction. values indicating more stringent latent A score of 2 is assigned if this profes- The data details on dealing with construc- defect liability and insurance regimes. sional must have a minimum number tion permits can be found at http://www In Madagascar, for example, under of years of practical experience, must .doingbusiness.org. 106 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA and whether the utility faces a financial FIGURE 9.6  Getting electricity: GETTING ELECTRICITY deterrent aimed at limiting outages efficiency, reliability and transparency (such as a requirement to compensate Doing Business records all procedures customers or pay fines when outages Rankings are based on distance to required for a business to obtain a perma- exceed a certain cap). frontier scores for four indicators nent electricity connection and supply for Days to obtain Cost to obtain a a standardized warehouse (figure 9.5). The ranking of locations on the ease of an electricity connection, as % of connection income per capita These procedures include applications getting electricity is determined by sort- and contracts with electricity utilities, ing their distance to frontier scores for all necessary inspections and clearances getting electricity. These scores are the 25% 25% from the distribution utility and other simple average of the distance to frontier Time Cost agencies, and the external and final con- scores for all the component indicators 25% 25% Procedures Reliability nection works. The questionnaire divides except the price of electricity (figure 9.6). of supply and transparency the process of getting an electricity of tariffs connection into distinct procedures and Data on reliability of supply are collected Steps to file a connection Power outages solicits data for calculating the time and from the electricity distribution utilities application, prepare and regulatory cost to complete each procedure. or regulators, depending on the specific a design, complete mechanisms in works, obtain approvals, place to monitor technical nature of the data. The rest of go through inspections, and reduce them; In addition, Doing Business measures the the data, including data on the transpar- install a meter and transparency of sign a supply tariffs reliability of supply and transparency of ency of tariffs and the procedures for contract tariffs index (included in the aggregate obtaining an electricity connection, are distance to frontier score and ranking collected from all market players—the Note: The price of electricity is measured but does on the ease of doing business) and the electricity distribution utility, electric- not count for the rankings. price of electricity (omitted from these ity regulatory agencies and independent aggregate measures). The reliability of professionals such as electrical engineers, the warehouse, the electricity connec- supply and transparency of tariffs index electrical contractors and construction tion and the monthly consumption are encompasses quantitative data on the companies. The electricity distribution used. duration and frequency of power out- utility consulted is the one serving the ages as well as qualitative information area (or areas) where warehouses are Assumptions about the on the mechanisms put in place by the located. If there is a choice of distribu- warehouse utility for monitoring power outages tion utilities, the one serving the largest The warehouse: and restoring power supply, the report- number of customers is selected. ƒƒ Is owned by a local entrepreneur. ing relationship between the utility and ƒƒ Is located in the selected city. the regulator for power outages, the To make the data comparable across ƒƒ Is located in an area where similar transparency and accessibility of tariffs locations, several assumptions about warehouses are typically located. In this area a new electricity connection is not eligible for a special investment FIGURE 9.5  Doing Business measures the connection process at the level of distribution utilities promotion regime (offering special subsidization or faster service, for example). ƒƒ Is located in an area with no physical constraints. For example, the property is not near a railway. ƒƒ Is a new construction and is being connected to electricity for the first Generation Transmission time. ƒƒ Has two stories, both above Distribution ground, with a total surface area of u New connections approximately 1,300.6 square meters u Network operation and maintenance (14,000 square feet). The plot of u Metering and billing land on which it is built is 929 square Customer meters (10,000 square feet). ƒƒ Is used for storage of goods. DATA NOTES 107 Assumptions about the electricity Procedures TABLE 9.4 What do the getting connection A procedure is defined as any interac- electricity indicators measure? The electricity connection: tion of the company’s employees or its Procedures to obtain an electricity ƒƒ Is a permanent one. main electrician or electrical engineer connection (number) ƒƒ Is a three-phase, four-wire Y connec- (that is, the one who may have done the Submitting all relevant documents and obtaining tion with a subscribed capacity of 140 internal wiring) with external parties, all necessary clearances and permits kilovolt-amperes (kVA) with a power such as the electricity distribution utility, Completing all required notifications and factor of 1, when 1 kVA = 1 kilowatt electricity supply utilities, government receiving all necessary inspections (kW). agencies, electrical contractors and Obtaining external installation works and possibly purchasing material for these works ƒƒ Has a length of 150 meters. The electrical firms. Interactions between connection is to either the low- company employees and steps related to Concluding any necessary supply contract and obtaining final supply or medium-voltage distribution the internal electrical wiring, such as the Time required to complete each procedure network and is either overhead or design and execution of the internal elec- (calendar days) underground, whichever is more trical installation plans, are not counted Is at least one calendar day common in the area where the as procedures. Procedures that must be Each procedure starts on a separate day warehouse is located. completed with the same utility but with ƒƒ Requires works that involve the different departments are counted as Does not include time spent gathering information crossing of a 10-meter-wide road (by separate procedures (table 9.4). Reflects the time spent in practice, with little excavation or overhead lines) but are follow-up and no prior contact with officials all carried out on public land. There is The company’s employees are assumed Cost required to complete each procedure no crossing of other owners’ private to complete all procedures themselves (% of income per capita) property because the warehouse has unless the use of a third party is man- Official costs only, no bribes access to a road. dated (for example, if only an electrician Value added tax excluded ƒƒ Includes only negligible length in the registered with the utility is allowed to Reliability of supply and transparency of customer’s private domain. submit an application). If the company tariffs index (0–8) ƒƒ Does not require work to install the can, but is not required to, request the Duration and frequency of power outages internal wiring of the warehouse. services of professionals (such as a Tools to monitor power outages This has already been completed private firm rather than the utility for Tools to restore power supply up to and including the customer’s the external works), these procedures service panel or switchboard and the are recorded if they are commonly done. Regulatory monitoring of utilities’ performance meter base. For all procedures, only the most likely Financial deterrents aimed at limiting outages cases (for example, more than 50% of Transparency and accessibility of tariffs Assumptions about the monthly the time the utility has the material) and Price of electricity (cents per kilowatt-hour) consumption for March those followed in practice for connecting Price based on monthly bill for commercial ƒƒ It is assumed that the warehouse a warehouse to electricity are counted. warehouse in case study operates 30 days a month from 9:00 Note: While Doing Business measures the price a.m. to 5:00 p.m. (8 hours a day), Time of electricity, it does not include these data when calculating the distance to frontier score for getting with equipment utilized at 80% of Time is recorded in calendar days. The electricity or the ranking on the ease of getting electricity. capacity on average, and that there measure captures the median duration are no electricity cuts (assumed for that the electricity utility and experts indi- simplicity reasons). cate is necessary in practice, rather than gathering information is not taken into ƒƒ The monthly energy consumption is required by law, to complete a procedure account. It is assumed that the com- 26,880 kilowatt-hours (kWh); hourly with minimum follow-up and no extra pany is aware of all electricity connection consumption is 112 kWh. payments. It is assumed that the mini- requirements and their sequence from ƒƒ If multiple electricity suppliers exist, mum time required for each procedure is the beginning. the warehouse is served by the one day. Although procedures may take cheapest supplier. place simultaneously, they cannot start Cost ƒƒ Tariffs effective in March of the cur- on the same day (that is, simultaneous Cost is recorded as a percentage of the rent year are used for calculation of procedures start on consecutive days). economy’s income per capita. Costs are the price of electricity for the ware- It is assumed that the company does not recorded exclusive of value added tax. house. Although March has 31 days, waste time and commits to completing All the fees and costs associated with for calculation purposes only 30 days each remaining procedure without delay. completing the procedures to connect are used. The time that the company spends on a warehouse to electricity are recorded, 108 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA including those related to obtaining in which the customer pays the deposit A location is eligible to obtain a score on clearances from government agencies, in cash to the utility, in this scenario the the reliability of supply and transparency applying for the connection, receiving company does not lose ownership con- of tariffs index if the utility collects data inspections of both the site and the inter- trol over the full amount and can continue on electricity outages (measuring the nal wiring, purchasing material, getting using it. In return the company will pay average total duration of outages per the actual connection works and paying the bank a commission for obtaining customer and the average number of a security deposit. Information from local the bond. The commission charged may outages per customer) and the SAIDI experts and specific regulations and fee vary depending on the credit standing of value is below a threshold of 100 hours schedules are used as sources for costs. the company. The best possible credit and the SAIFI value below a threshold of If several local partners provide different standing and thus the lowest possible 100 outages. estimates, the median reported value is commission are assumed. Where a bond used. In all cases the cost excludes bribes. can be put up, the value recorded for the Because the focus is on measuring the deposit is the annual commission times reliability of the electricity supply, a Security deposit the five years assumed to be the length location is not eligible to obtain a score Utilities may require security deposits as of the contract. If both options exist, the if outages are too frequent or long-lasting a guarantee against the possible failure of cheaper alternative is recorded. for the electricity supply to be consid- customers to pay their consumption bills. ered reliable—that is, if the SAIDI value For this reason, the security deposit for a In Honduras in June 2015 a customer exceeds the threshold of 100 hours or the new customer is most often calculated requesting a 140-kVA electricity connec- SAIFI value exceeds the threshold of 100 as a function of the customer’s estimated tion would have had to put up a security outages.2 A location is also not eligible consumption. deposit of 126,894 Honduran lempiras to obtain a score on the index if data on (US$5,616) in cash or check, and the power outages are not collected. Doing Business does not record the full deposit would have been returned only amount of the security deposit. If the at the end of the contract. The customer For all locations that meet the criteria as deposit is based on the customer’s could instead have invested this money determined by Doing Business, a score on actual consumption, this basis is the one at the prevailing lending rate of 20.66%. the reliability of supply and transparency assumed in the case study. Rather than Over the five years of the contract this of tariffs index is calculated on the basis the full amount of the security deposit, would imply a present value of lost of the following six components: Doing Business records the present value interest earnings of 77,272.68 lempiras ƒƒ What the SAIDI and SAIFI values are. of the losses in interest earnings expe- (US$3,420). In contrast, if the customer If SAIDI and SAIFI are 12 (equivalent to rienced by the customer because the chose to settle the deposit with a bank an outage of one hour each month) or utility holds the security deposit over a guarantee at an annual rate of 2.5%, the below, a score of 1 is assigned. If SAIDI prolonged period, in most cases until the amount lost over the five years would be and SAIFI are 4 (equivalent to an out- end of the contract (assumed to be after just 15,861.75 lempiras (US$702). age of one hour each quarter) or below, five years). In cases where the security 1 additional point is assigned. Finally, if deposit is used to cover the first monthly Reliability of supply and SAIDI and SAIFI are 1 (equivalent to an consumption bills, it is not recorded. To transparency of tariffs index outage of one hour per year) or below, calculate the present value of the lost Doing Business uses the system average 1 more point is assigned. interest earnings, the end-2015 lending interruption duration index (SAIDI) ƒƒ What tools are used by the distribu- rates from the International Monetary and the system average interruption tion utility to monitor power out- Fund’s International Financial Statistics frequency index (SAIFI) to measure the ages. A score of 1 is assigned if the are used. In cases where the security duration and frequency of power outages utility uses automated tools, such deposit is returned with interest, the dif- in each of the selected locations. SAIDI is as the supervisory control and data ference between the lending rate and the average total duration of outages over acquisition (SCADA) system; 0 if it the interest paid by the utility is used to the course of a year for each customer relies solely on calls from customers calculate the present value. served, while SAIFI is the average number and records and monitors outages of service interruptions experienced by a manually. In some economies the security deposit customer in a year. Annual data (covering ƒƒ What tools are used by the distribu- can be put up in the form of a bond: the the calendar year) are collected from dis- tion utility to restore power supply. A company can obtain from a bank or an tribution utility companies and national score of 1 is assigned if the utility uses insurance company a guarantee issued regulators on SAIDI and SAIFI. Both automated tools, such as the SCADA on the assets it holds with that financial SAIDI and SAIFI estimates include load system; 0 if it relies solely on manual institution. In contrast to the scenario shedding. resources for service restoration, DATA NOTES 109 such as field crews or maintenance (a score of 1) and requires the utility to ensure comparability across locations personnel. compensate customers if outages last and economies. ƒƒ Whether a regulator—that is, an longer than a maximum period defined entity separate from the utility— by the regulator (a score of 1). Customers The price of electricity is measured in monitors the utility’s performance are notified of a change in tariffs ahead of US$ cents per kilowatt-hour. On the basis on reliability of supply. A score of 1 the next billing cycle and can easily check of the assumptions about monthly con- is assigned if the regulator performs effective tariffs online (a score of 1). sumption, a monthly bill for a commercial periodic or real-time reviews; 0 if it Adding these numbers gives the Czech warehouse in each of the selected loca- does not monitor power outages and Republic a score of 8 on the reliability of tions is computed for the month of March. does not require the utility to report supply and transparency of tariffs index. As noted, the warehouse uses electricity on reliability of supply. 30 days a month, from 9:00 a.m. to 5:00 ƒƒ Whether financial deterrents exist to On the other hand, several economies p.m., so different tariff schedules may limit outages. A score of 1 is assigned receive a score of 0 on the reliability of apply if a time-of-use tariff is available. if the utility compensates customers supply and transparency of tariffs index. when outages exceed a certain cap, The reason may be that outages occur The data details on getting electricity can be if the utility is fined by the regulator more than once a month and none of the found at http:// www.doingbusiness.org. The when outages exceed a certain cap or mechanisms and tools measured by the initial methodology was developed by Carolin if both these conditions are met; 0 if index are in place. An economy may also Geginat and Rita Ramalho (“Electricity no compensation mechanism of any receive a score of 0 if either the SAIDI or Connections and Firm Performance in 183 kind is available. SAIFI value (or both) exceeds the thresh- Countries,” Global Indicators Group, World ƒƒ Whether electricity tariffs are trans- old of 100. For Papua New Guinea, for Bank Group, Washington, DC, 2015) and is parent and easily available. A score example, the SAIDI value (211) exceeds adopted here with minor changes. of 1 is assigned if effective tariffs are the threshold. Based on the criteria available online and customers are established, Papua New Guinea cannot notified of a change in tariff a full bill- receive a score on the index even though REGISTERING PROPERTY ing cycle (that is, one month) ahead the country has regulatory monitoring of time; 0 if not. of outages and there is a compensation Doing Business records the full sequence mechanism for customers. of procedures necessary for a business The index ranges from 0 to 8, with higher (the buyer) to purchase a property from values indicating greater reliability of If an economy issued no electricity con- another business (the seller) and to trans- electricity supply and greater transpar- nections between June 2015 and June fer the property title to the buyer’s name ency of tariffs. In the Czech Republic, 2016, or if electricity is not provided so that the buyer can use the property for for example, the distribution utility com- during that period, the economy receives expanding its business, use the property pany PREdistribuce uses SAIDI and SAIFI a “no practice” mark on the procedures, as collateral in taking new loans or, if nec- metrics to monitor and collect data on time and cost indicators. In addition, a “no essary, sell the property to another busi- power outages. In 2015 the average total practice” economy receives a score of 0 ness. It also measures the time and cost duration of power outages in Prague was on the reliability of supply and transpar- to complete each of these procedures. 0.49 hours per customer and the average ency of tariff index even if the utility has in In addition, Doing Business measures the number of outages experienced by a cus- place automated systems for monitoring quality of the land administration system tomer was 0.33. Both SAIDI and SAIFI and restoring outages, there is regulatory in each economy. The quality of land are below the threshold and indicate that oversight of utilities on power interrup- administration index has five dimensions: there was less than one outage a year per tions, and tariffs are publicly available. reliability of infrastructure, transparency customer, for a total duration of less than of information, geographic coverage, land one hour. So Czech Republic not only Price of electricity dispute resolution and equal access to meets the eligibility criteria for obtaining a Doing Business measures the price of property rights. score on the index, it also receives a score electricity but does not include these data of 3 on the first component of the index. when calculating the distance to frontier The ranking of locations on the ease of The utility uses an automated system score for getting electricity or the ranking registering property is determined by (SCADA) to identify faults in the network on the ease of getting electricity. (The sorting their distance to frontier scores (a score of 1) and restore electricity ser- data are available on the Doing Business for registering property. These scores vice (a score of 1). The national regulator website, at http://www.doingbusiness are the simple average of the distance to actively reviews the utility’s performance .org.) The data on electricity prices are frontier scores for each of the component in providing reliable electricity service based on standardized assumptions to indicators (figure 9.7). 110 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA FIGURE 9.7  Registering property: third party on their behalf. Local property all safety standards, building codes efficiency and quality of land lawyers, notaries and property registries and other legal requirements. It has administration system provide information on procedures as no heating system. The property of well as the time and cost to complete land and building will be transferred in Rankings are based on distance to each of them. its entirety. frontier scores for four indicators ƒƒ Will not be subject to renovations Days to transfer Cost to transfer property, as % of Assumptions about the parties or additional building following the property between two local companies property value The parties (buyer and seller): purchase. ƒƒ Are limited liability companies (or the ƒƒ Has no trees, natural water sources, legal equivalent). natural reserves or historical monu- 25% 25% ƒƒ Are located in the periurban area of ments of any kind. Time Cost the selected city. ƒƒ Will not be used for special purposes, 25% 25% Procedures Quality ƒƒ Are 100% domestically and privately and no special permits, such as for of land administration index owned. residential use, industrial plants, ƒƒ Have 50 employees each, all of whom waste storage or certain types of agri- Steps to transfer Reliability, are nationals. cultural activities, are required. property so that it transparency and can be sold or used coverage of land ƒƒ Perform general commercial activities. ƒƒ Has no occupants, and no other party as collateral administration system; holds a legal interest in it. protection against land disputes; equal access Assumptions about the property to property rights The property: Procedures ƒƒ Has a value of 50 times income per A procedure is defined as any interaction capita. The sale price equals the value. of the buyer or the seller, their agents (if EFFICIENCY OF TRANSFERRING ƒƒ Is fully owned by the seller. an agent is legally or in practice required) PROPERTY ƒƒ Has no mortgages attached and has or the property with external parties, been under the same ownership for including government agencies, inspec- As recorded by Doing Business, the pro- the past 10 years. tors, notaries and lawyers. Interactions cess of transferring property starts with ƒƒ Is registered in the land registry or between company officers and employ- obtaining the necessary documents, such cadastre, or both, and is free of title ees are not considered. All procedures as a copy of the seller’s title if necessary, disputes. that are legally or in practice required for and conducting due diligence if required. ƒƒ Is located in a periurban commercial registering property are recorded, even The transaction is considered complete zone, and no rezoning is required. if they may be avoided in exceptional when it is opposable to third parties and ƒƒ Consists of land and a building. The cases (table 9.5). It is assumed that the when the buyer can use the property, use land area is 557.4 square meters buyer follows the fastest legal option it as collateral for a bank loan or resell it (6,000 square feet). A two-story available and used by the majority of (figure 9.8). Every procedure required by warehouse of 929 square meters property owners. Although the buyer law or necessary in practice is included, (10,000 square feet) is located on the may use lawyers or other professionals whether it is the responsibility of the sell- land. The warehouse is 10 years old, is where necessary in the registration pro- er or the buyer or must be completed by a in good condition and complies with cess, it is assumed that the buyer does not employ an outside facilitator in the FIGURE 9.8 What are the time, cost and number of procedures required to transfer registration process unless legally or in property between two local companies? practice required to do so. Cost (% of property value) Time Buyer can use Time is recorded in calendar days. The the property, measure captures the median duration resell it or use it as that property lawyers, notaries or registry collateral Number of officials indicate is necessary to complete Land & two-story procedures a procedure. It is assumed that the mini- warehouse mum time required for each procedure is Seller with property one day, except for procedures that can registered and no title disputes Time be fully completed online, for which the Preregistration Registration Postregistration (days) time required is recorded as half a day. Although procedures may take place DATA NOTES 111 TABLE 9.5  What do the indicators on costs borne by the buyer and those borne are fully digital; 1 if the majority are the efficiency of transferring property by the seller are included. If cost esti- scanned; 0 if the majority are kept in measure? mates differ among sources, the median paper format. reported value is used. ƒƒ Whether there is an electronic data- Procedures to legally transfer title on immovable property (number) base for checking for encumbrances. Preregistration procedures (for example, checking QUALITY OF LAND A score of 1 is assigned if yes; 0 if no. for liens, notarizing sales agreement, paying ADMINISTRATION ƒƒ How maps of land plots are kept at property transfer taxes) the mapping agency of the selected Registration procedures in the selected city The quality of land administration index location. A score of 2 is assigned if Postregistration procedures (for example, filing is composed of five other indices: the the majority of maps are fully digital; title with municipality) reliability of infrastructure, transparency 1 if the majority are scanned; 0 if the Time required to complete each procedure (calendar days) of information, geographic coverage, land majority are kept in paper format. dispute resolution and equal access to ƒƒ Whether there is a geographic Does not include time spent gathering information property rights indices (table 9.6). Data information system—an electronic Each procedure starts on a separate day— are collected for each of the selected database for recording boundar- though procedures that can be fully completed locations. ies, checking plans and providing online are an exception to this rule cadastral information. A score of 1 is Procedure considered completed once final Reliability of infrastructure index assigned if yes; 0 if no. document is received The reliability of infrastructure index has ƒƒ How the land ownership registry No prior contact with officials six components: and mapping agency are linked. A Cost required to complete each procedure ƒƒ How land titles are kept at the registry score of 1 is assigned if information (% of property value) of the selected location. A score of 2 about land ownership and maps are Official costs only, no bribes is assigned if the majority of land titles kept in a single database or in linked No value added or capital gains taxes included TABLE 9.6  What do the indicators on the quality of land administration measure? simultaneously, they cannot start on the same day, again with the exception of Reliability of infrastructure index (0–8) procedures that can be fully completed Type of system for archiving information on land ownership online. It is assumed that the buyer does Availability of electronic database to check for encumbrances not waste time and commits to complet- Type of system for archiving maps ing each remaining procedure without Availability of geographic information system delay. If a procedure can be accelerated for Link between property ownership registry and mapping system an additional cost, the fastest legal proce- Transparency of information index (0–6) dure available and used by the majority of property owners is chosen. If procedures Accessibility of information on land ownership can be undertaken simultaneously, it Accessibility of maps of land plots is assumed that they are. It is assumed Publication of fee schedules, lists of registration documents, service standards that the parties involved are aware of all Availability of a specific and separate mechanism for complaints requirements and their sequence from Publication of statistics about the number of property transactions the beginning. Time spent on gathering Geographic coverage index (0–8) information is not considered. Coverage of land registry at the level of the selected city and the economy Cost Coverage of mapping agency at the level of the selected city and the economy Cost is recorded as a percentage of the Land dispute resolution index (0–8) property value, assumed to be equivalent Legal framework for immovable property registration to 50 times income per capita. Only offi- Mechanisms to prevent and resolve land disputes cial costs required by law are recorded, Equal access to property rights index (-2–0) including fees, transfer taxes, stamp Unequal ownership rights to property between unmarried men and women duties and any other payment to the property registry, notaries, public agen- Unequal ownership rights to property between married men and women cies or lawyers. Other taxes, such as Quality of land administration index (0–30) capital gains tax or value added tax, are Sum of the reliability of infrastructure, transparency of information, geographic coverage, land dispute excluded from the cost measure. Both resolution and equal access to property rights indices 112 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA databases; 0 if there is no connection transaction is made publicly available. ƒƒ Whether there is a specific and sepa- between the different databases. A score of 0.5 is assigned if the fee rate mechanism for filing complaints ƒƒ How immovable property is identified. schedule is accessible online or on a about a problem that occurred at A score of 1 is assigned if there is a public board or is free of charge; 0 if the mapping agency. A score of unique number to identify properties it is not made available to the public 0.5 is assigned if there is a specific for the majority of land plots; 0 if there or if it can be obtained only in person. and separate mechanism for filing a are multiple identifiers. ƒƒ Whether the agency in charge of complaint; 0 if there is only a general immovable property registration mechanism or no mechanism. The index ranges from 0 to 8, with higher commits to delivering a legally values indicating a higher quality of binding document that proves prop- The index ranges from 0 to 6, with higher infrastructure for ensuring the reliabil- erty ownership within a specific time values indicating greater transparency in ity of information on property titles and frame. A score of 0.5 is assigned if the the land administration system. In the boundaries. In Turkey, for example, the service standard is accessible online Netherlands, for example, anyone who land registry offices in Istanbul maintain or on a public board; 0 if it is not made pays a fee can consult the land ownership titles in a fully digital format (a score of available to the public or if it can be database (a score of 1). Information can 2) and have a fully electronic database obtained only in person. be obtained at the office, by mail or online to check for encumbrances (a score of ƒƒ Whether there is a specific and sepa- using the Kadaster website (http:/ /www 1). The Cadastral Directorate offices in rate mechanism for filing complaints .kadaster.nl). Anyone can also get Istanbul have digital maps (a score of about a problem that occurred at information online about the list of docu- 2), and the Geographical Information the agency in charge of immovable ments to submit for property registration Directorate has a public portal allowing property registration. A score of 1 (a score of 0.5), the fee schedule for reg- users to check the plans and cadastral is assigned if there is a specific and istration (a score of 0.5) and the service information on parcels along with satel- separate mechanism for filing a standards (a score of 0.5). And anyone lite images (a score of 1). Databases complaint; 0 if there is only a general facing a problem at the land registry can about land ownership and maps are mechanism or no mechanism. file a complaint or report an error by fill- linked to each other through the TAKBIS ƒƒ Whether there are publicly available ing in a specific form online (a score of 1). system, an integrated information system official statistics tracking the number In addition, the Kadaster makes statistics for the land registry offices and cadastral of transactions at the immovable about land transactions available to the offices (a score of 1). Finally, there is a property registration agency. A score public, reporting a total of 178,293 prop- unique identifying number for properties of 0.5 is assigned if statistics are pub- erty transfers in Amsterdam in 2015 (a (a score of 1). Adding these numbers lished about property transfers in the score of 0.5). Moreover, anyone who pays gives Turkey a score of 8 on the reliability selected location in the past calendar a fee can consult online cadastral maps of infrastructure index. year; 0 if no such statistics are made (a score of 0.5). It is also possible to get publicly available. public access to the fee schedule for map Transparency of information ƒƒ Whether maps of land plots are made consultation (a score of 0.5), the service index publicly available. A score of 0.5 is standards for delivery of an updated plan The transparency of information index assigned if maps are accessible by (a score of 0.5) and a specific mecha- has 10 components: anyone; 0 if access is restricted. nism for filing a complaint about a map ƒƒ Whether information on land owner- ƒƒ Whether the fee schedule for access- (a score of 0.5). Adding these numbers ship is made publicly available. A ing maps is made publicly available. gives the Netherlands a score of 6 on the score of 1 is assigned if information A score of 0.5 is assigned if the fee transparency of information index. on land ownership is accessible by schedule is accessible online or on a anyone; 0 if access is restricted. public board or free of charge; 0 if it is Geographic coverage index ƒƒ Whether the list of documents not made available to the public or if it The geographic coverage index has four required for completing any type of can be obtained only in person. components: property transaction is made publicly ƒƒ Whether the mapping agency com- ƒƒ How complete the coverage of the available. A score of 0.5 is assigned mits to delivering an updated map land registry is at the level of the if the list of documents is accessible within a specific time frame. A score selected location. A score of 2 is online or on a public board; 0 if it is of 0.5 is assigned if the service stan- assigned if all privately held land plots not made available to the public or if it dard is accessible online or on a public in the location are formally registered can be obtained only in person. board; 0 if it is not made available to at the land registry; 0 if not. ƒƒ Whether the fee schedule for the public or if it can be obtained only ƒƒ How complete the coverage of the completing any type of property in person. land registry is at the level of the DATA NOTES 113 economy. A score of 2 is assigned certified by the immovable property compensation mechanism to cover for if all privately held land plots in the registry. A score of 0.5 is assigned if losses incurred by parties who engaged in economy are formally registered at yes; 0 if no. good faith in a property transaction based the land registry; 0 if not. ƒƒ Whether the legal system requires on an error by the registry (a score of 0.5). ƒƒ How complete the coverage of the verification of the legal validity of the A notary verifies the legal validity of the mapping agency is at the level of documents necessary for a property documents in a property transaction (a the selected location. A score of 2 is transaction. A score of 0.5 is assigned score of 0.5) and the identity of the parties assigned if all privately held land plots if there is a review of legal validity, (a score of 0.5), in accordance with the in the location are mapped; 0 if not. either by the registrar or by a profes- Law on the Notary Office (Law I-2882). ƒƒ How complete the coverage of the sional (such as a notary or lawyer); 0 Lithuania has a national database to mapping agency is at the level of the if there is no review. verify the accuracy of identity documents economy. A score of 2 is assigned ƒƒ Whether the legal system requires (a score of 1). In a land dispute between if all privately held land plots in the verification of the identity of the par- two Lithuanian companies over the tenure economy are mapped; 0 if not. ties to a property transaction. A score rights of a property worth US$745,000, of 0.5 is assigned if there is verifica- the Vilnius District Court gives a decision The index ranges from 0 to 8, with higher tion of identity, either by the registrar in less than one year (a score of 3). Finally, values indicating greater geographic or by a professional (such as a notary statistics about land disputes are collected coverage in land ownership registration or lawyer); 0 if there is no verification. and published; there were a total of seven and cadastral mapping. In the Republic ƒƒ Whether there is a national database land disputes in the country in 2015 (a of Korea, for example, all privately held to verify the accuracy of identity score of 0.5). Adding these numbers gives land plots are formally registered at the documents. A score of 1 is assigned if Lithuania a score of 8 on the land dispute land registry in Seoul (a score of 2) and in such a national database is available; resolution index. the economy as a whole (a score of 2). In 0 if not. addition, all privately held land plots are ƒƒ How much time it takes to obtain a Equal access to property rights mapped in Seoul (a score of 2) and in the decision from a court of first instance index economy as a whole (a score of 2). Adding (without appeal) in a standard land The equal access to property rights index these numbers gives Korea a score of 8 on dispute between two local businesses has two components: the geographic coverage index. over tenure rights worth 50 times ƒƒ Whether unmarried men and unmar- income per capita and located in ried women have equal ownership Land dispute resolution index the selected location. A score of 3 is rights to property. A score of −1 is The land dispute resolution index assess- assigned if it takes less than one year; 2 assigned if there are unequal owner- es the legal framework for immovable if it takes between one and two years; 1 ship rights to property; 0 if there is property registration and the accessibility if it takes between two and three years; equality. of dispute resolution mechanisms. The 0 if it takes more than three years. ƒƒ Whether married men and married index has eight components: ƒƒ Whether there are publicly available women have equal ownership rights ƒƒ Whether the law requires that all statistics on the number of land to property. A score of −1 is assigned property sale transactions be reg- disputes in the first instance. A score if there are unequal ownership rights istered at the immovable property of 0.5 is assigned if statistics are to property; 0 if there is equality. registry to make them opposable to published about land disputes in the third parties. A score of 1.5 is assigned economy in the past calendar year; 0 Ownership rights cover the ability to if yes; 0 if no. if no such statistics are made publicly manage, control, administer, access, ƒƒ Whether the formal system of available. encumber, receive, dispose of and immovable property registration is transfer property. Each restriction is con- subject to a guarantee. A score of 0.5 The index ranges from 0 to 8, with sidered if there is a differential treatment is assigned if either a state or private higher values indicating greater protec- for men and women in the law consider- guarantee over immovable property tion against land disputes. In Lithuania, ing the default marital property regime. registration is required by law; 0 if no for example, according to the Civil Code For customary land systems, equality is such guarantee is required. and the Law on the Real Property Register, assumed unless there is a general legal ƒƒ Whether there is a specific compen- property transactions must be registered provision stating a differential treatment. sation mechanism to cover for losses at the land registry to make them oppos- incurred by parties who engaged in able to third parties (a score of 1.5). The The index ranges from -2 to 0, with good faith in a property transaction property transfer system is guaranteed higher values indicating greater inclu- based on erroneous information by the state (a score of 0.5) and has a siveness of property rights. In Mali, for 114 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA example, unmarried men and unmarried of economies on the ease of enforcing FIGURE 9.9  Enforcing contracts: women have equal ownership rights to contracts is determined by sorting their efficiency and quality of commercial property (a score of 0). The same applies distance to frontier scores for enforcing dispute resolution to married men and married women who contracts. These scores are the simple can use their property in the same way (a average of the distance to frontier scores Rankings are based on distance to frontier scores for three indicators score of 0). Adding these numbers gives for each of the component indicators Mali a score of 0 on the equal access to (figure 9.9). Days to resolve Attorney, court and commercial sale dispute enforcement costs as property rights index—which indicates through the courts % of claim value equal property rights between men and EFFICIENCY OF RESOLVING A women. In contrast, in Swaziland unmar- COMMERCIAL DISPUTE ried men and unmarried women do not 33.3% 33.3% Time Cost have equal ownership rights to property The data on time and cost are built by according to the Deeds Registry Act of following the step-by-step evolution of 33.3% Quality of judicial 1968, article 16 (a score of −1). The same a commercial sale dispute (figure 9.10). processes index applies to married men and married The data are collected for a specific court women who are not permitted to use for each location covered, under the their property in the same way accord- assumptions about the case described Use of good practices promoting quality and efficiency ing to the Deeds Registry Act of 1968, below. The court is the one with juris- articles 16 and 45 (a score of −1). Adding diction over disputes worth 200% of these numbers gives Swaziland a score of income per capita or $5,000, which- -2 on the equal access to property rights ever is greater. The name of the relevant FIGURE 9.10  What are the time and index—which indicates unequal property court in each economy is published on cost to resolve a commercial dispute rights between men and women. the Doing Business website at http:// through the courts? doingbusinessorg/data/exploretopics Quality of land administration /enforcing-contracts. Court index The quality of land administration index is Assumptions about the case the sum of the scores on the reliability of ƒƒ The value of the claim is equal to Time Cost infrastructure, transparency of informa- 200% of the economy’s income per tion, geographic coverage, land dispute capita or $5,000, whichever is greater. resolution and equal access to property ƒƒ The dispute concerns a lawful Company A Company B rights indices. The index ranges from 0 to transaction between two businesses (seller & Commercial (buyer & plaintiff) dispute defendant) 30, with higher values indicating better (Seller and Buyer), both located in the quality of the land administration system. selected city. Pursuant to a contract Filing & Trial & Enforcement service judgment between the businesses, Seller sells The data details on registering property can some custom-made furniture to be found at http://www.doingbusiness.org. Buyer worth 200% of the economy’s income per capita or $5,000, which- ever is greater. After Seller delivers ENFORCING CONTRACTS the goods to Buyer, Buyer refuses to TABLE 9.7  What do the indicators on pay the contract price, alleging that the efficiency of resolving a commercial Doing Business measures the time and the goods are not of adequate qual- dispute measure? cost for resolving a commercial dispute ity. Because they were custom-made, Time required to enforce a contract through through a local first-instance court (table Seller is unable to sell them to anyone the courts (calendar days) 9.7) and the quality of judicial processes else. Time to file and serve the case index, evaluating whether each economy ƒƒ Seller (the plaintiff) sues Buyer (the Time for trial and to obtain the judgment has adopted a series of good practices defendant) to recover the amount Time to enforce the judgment that promote quality and efficiency in under the sales agreement. The Cost required to enforce a contract through the court system. The data are collected dispute is brought before the court the courts (% of claim) through study of the codes of civil proce- located in the selected locations with Average attorney fees dure and other court regulations as well jurisdiction over commercial cases Court costs as questionnaires completed by local worth 200% of income per capita or Enforcement costs litigation lawyers and judges. The ranking $5,000, whichever is greater. DATA NOTES 115 ƒƒ At the outset of the dispute, Seller Cost QUALITY OF JUDICIAL decides to attach Buyer’s movable Cost is recorded as a percentage of the PROCESSES assets (for example, office equipment claim, assumed to be equivalent to 200% and vehicles) because Seller fears that of income per capita or $5,000, which- The quality of judicial processes index Buyer may hide its assets or otherwise ever is greater. Three types of costs are measures whether each location has become insolvent. recorded: court costs, enforcement costs adopted a series of good practices in its ƒƒ The claim is disputed on the merits and average attorney fees. court system in four areas: court struc- because of Buyer’s allegation that the ture and proceedings, case management, quality of the goods was not adequate. Court costs include all costs that Seller court automation and alternative dispute Because the court cannot decide the (plaintiff) must advance to the court, resolution (table 9.8). case on the basis of documentary regardless of the final cost borne by evidence or legal title alone, an expert Seller. Court costs include the fees Court structure and proceedings opinion is given on the quality of the that must be paid to obtain an expert index goods. If it is standard practice in the opinion. Enforcement costs are all costs The court structure and proceedings economy for each party to call its own that Seller (plaintiff) must advance to index has five components: expert witness, the parties each call enforce the judgment through a public ƒƒ Whether a specialized commercial one expert witness. If it is standard sale of Buyer’s movable assets, regard- court or a section dedicated solely practice for the judge to appoint an less of the final cost borne by Seller. to hearing commercial cases is in independent expert, the judge does Average attorney fees are the fees that place. A score of 1.5 is assigned if so. In this case the judge does not Seller (plaintiff) must advance to a local yes; 0 if no. allow opposing expert testimony. attorney to represent Seller in the stan- ƒƒ Whether a small claims court or a ƒƒ Following the expert opinion, the judge dardized case. Bribes are not taken into fast-track procedure for small claims decides that the goods delivered by account. is in place. A score of 1 is assigned if Seller were of adequate quality and that Buyer must pay the contract price. TABLE 9.8  What do the indicators on the quality of judicial processes measure? The judge thus renders a final judg- Court structure and proceedings index (0–5) ment that is 100% in favor of Seller. ƒƒ Buyer does not appeal the judgment. Availability of specialized commercial court, division or section Seller decides to start enforcing the Availability of small claims court and/or simplified procedure for small claims judgment as soon as the time allo- Availability of pretrial attachment cated by law for appeal lapses. Criteria used to assign cases to judges ƒƒ Seller takes all required steps for Evidentiary weight of woman’s testimony prompt enforcement of the judgment. Case management index (0–6) The money is successfully collected through a public sale of Buyer’s mov- Regulations setting time standards for key court events able assets (for example, office equip- Regulations on adjournments and continuances ment and vehicles). Availability of performance measurement mechanisms Availability of pretrial conference Time Availability of electronic case management system for judges Time is recorded in calendar days, Availability of electronic case management system for lawyers counted from the moment the plaintiff Court automation index (0–4) decides to file the lawsuit in court until payment. This includes both the days Ability to file initial complaint electronically when actions take place and the waiting Ability to serve initial complaint electronically periods in between. The average dura- Ability to pay court fees electronically tion of three different stages of dispute Publication of judgments resolution is recorded: the completion of Alternative dispute resolution index (0–3) service of process (time to file and serve Arbitration the case), the issuance of judgment (time Voluntary mediation and/or conciliation for trial and to obtain the judgment) and the recovery of the claim value through a Quality of judicial processes index (0–18) public sale (time for enforcement of the Sum of the court structure and proceedings, case management, court automation and alternative dispute resolution indices judgment). 116 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA such a court or procedure is in place, Case management index pretrial conference: (i) scheduling it is applicable to all civil cases and the The case management index has six (including the time frame for filing law sets a cap on the value of cases components: motions and other documents with that can be handled through this court ƒƒ Whether any of the applicable laws the court); (ii) case complexity and or procedure. If small claims are han- or regulations on civil procedure projected length of trial; (iii) pos- dled by a stand-alone court, the point contain time standards for at least sibility of settlement or alternative is assigned only if this court applies three of the following key court dispute resolution; (iv) exchange a simplified procedure. An additional events: (i) service of process; (ii) first of witness lists; (v) evidence; (vi) score of 0.5 is assigned if parties hearing; (iii) filing of the statement jurisdiction and other procedural can represent themselves before of defense; (iv) completion of the issues; and (vii) the narrowing down this court or during this procedure. evidence period; (v) filing of testi- of contentious issues. A score of 1 is If no small claims court or simplified mony by expert; and (vi) submission assigned if a pretrial conference in procedure is in place, a score of 0 is of the final judgment. A score of 1 is which at least three of these events assigned. assigned if such time standards are are discussed is held within the com- ƒƒ Whether plaintiffs can obtain pretrial available and respected in more than petent court; 0 if not. attachment of the defendant’s mov- 50% of cases; 0.5 if they are avail- ƒƒ Whether judges within the com- able assets if they fear the assets may able but not respected in more than petent court can use an electronic be moved out of the jurisdiction or 50% of cases; 0 if there are time case management system for at otherwise dissipated. A score of 1 is standards for less than three of these least four of the following purposes: assigned if yes; 0 if no. key court events. (i) to access laws, regulations ƒƒ Whether cases are assigned ran- ƒƒ Whether there are any laws regulat- and case law; (ii) to automatically domly and automatically to judges ing the maximum number of adjourn- generate a hearing schedule for all throughout the competent court. A ments or continuances that can cases on their docket; (iii) to send score of 1 is assigned if the assign- be granted, whether adjournments notifications (for example, e-mails) ment of cases is random and auto- are limited by law to unforeseen to lawyers; (iv) to track the status mated; 0.5 if it is random but not and exceptional circumstances and of a case on their docket; (v) to automated; 0 if it is neither random whether these rules are respected view and manage case documents nor automated. in more than 50% of cases. A score (briefs, motions); (vi) to assist in ƒƒ Whether a woman’s testimony car- of 1 is assigned if all three conditions writing judgments; (vii) to semiau- ries the same evidentiary weight are met; 0.5 if only two of the three tomatically generate court orders; in court as a man’s. A score of -1 is conditions are met; 0 if only one of the and (viii) to view court orders and assigned if the law differentiates conditions is met or if none are. judgments in a particular case. A between the evidentiary value of a ƒƒ Whether there are any performance score of 1 is assigned if an electronic woman’s testimony and that of a measurement reports that can be case management system is avail- man; 0 if it does not. generated about the competent court able that judges can use for at least to monitor the court’s performance, to four of these purposes; 0 if not. The index ranges from 0 to 5, with monitor the progress of cases through ƒƒ Whether lawyers can use an elec- higher values indicating a more sophisti- the court and to ensure compliance tronic case management system for cated and streamlined court structure. In with established time standards. A at least four of the following pur- Bosnia and Herzegovina, for example, a score of 1 is assigned if at least two poses: (i) to access laws, regulations specialized commercial court is in place of the following four reports are made and case law; (ii) to access forms (a score of 1.5), and small claims can be publicly available: (i) time to disposi- to be submitted to the court; (iii) to resolved through a dedicated court in tion report; (ii) clearance rate report; receive notifications (for example, which self-representation is allowed (a (iii) age of pending cases report; and e-mails); (iv) to track the status of a score of 1.5). Plaintiffs can obtain pretrial (iv) single case progress report. A case; (v) to view and manage case attachment of the defendant’s movable score of 0 is assigned if only one of documents (briefs, motions); (vi) to assets if they fear dissipation during these reports is available or if none file briefs and documents with the trial (a score of 1). Cases are assigned are. court; and (vii) to view court orders randomly through an electronic case ƒƒ Whether a pretrial conference is and decisions in a particular case. A management system (a score of 1). among the case management tech- score of 1 is assigned if an electronic Adding these numbers gives Bosnia and niques used before the competent case management system is available Herzegovina a score of 5 on the court court and at least three of the follow- that lawyers can use for at least four structure and proceedings index. ing issues are discussed during the of these purposes; 0 if not. DATA NOTES 117 The index ranges from 0 to 6, with higher to the general public; 0.5 if only judg- substantially all their aspects. A score values indicating a more qualitative and ments rendered at the appeal and of 0.5 is assigned if yes; 0 if no. efficient case management system. In supreme court level are made avail- ƒƒ Whether there are any financial incen- Croatia, for example, time standards able to the general public; 0 in all tives for parties to attempt mediation for at least three key court events are other instances. or conciliation (for example, if media- contained in applicable civil procedure tion or conciliation is successful, a instruments and are respected in more The index ranges from 0 to 4, with refund of court filing fees, an income than 50% of cases (a score of 1). The higher values indicating a more auto- tax credit or the like). A score of 0.5 is law stipulates that adjournments can mated, efficient and transparent court assigned if yes; 0 if no. be granted only for unforeseen and system. In Korea, for example, the initial exceptional circumstances and this rule summons can be filed online (a score The index ranges from 0 to 3, with is respected in more than 50% of cases of 1), it can be served on the defendant higher values associated with greater (a score of 0.5). A time to disposition electronically (a score of 1), and court availability of mechanisms of alternative report and a clearance rate report can fees can be paid electronically as well dispute resolution. In Israel, for example, be generated about the competent (a score of 1). In addition, judgments in arbitration is regulated through a dedi- court (a score of 1). A pretrial confer- commercial cases at all levels are made cated statute (a score of 0.5), all relevant ence is among the case management publicly available through the internet (a commercial disputes can be submitted techniques used before the Zagreb score of 1). Adding these numbers gives to arbitration (a score of 0.5), and valid Commercial Court (a score of 1). An Korea a score of 4 on the court automa- arbitration clauses are usually enforced electronic case management system tion index. by the courts (a score of 0.5). Voluntary satisfying the criteria outlined above is mediation is a recognized way of resolv- available to judges (a score of 1) and Alternative dispute resolution ing commercial disputes (a score of 0.5), to lawyers (a score of 1). Adding these index it is regulated through a dedicated statute numbers gives Croatia a score of 5.5 on The alternative dispute resolution index (a score of 0.5), and part of the filing fees the case management index, the highest has six components: is reimbursed if the process is successful score attained by any economy on this ƒƒ Whether domestic commercial arbi- (a score of 0.5). Adding these numbers index. tration is governed by a consolidated gives Israel a score of 3 on the alternative law or consolidated chapter or section dispute resolution index. Court automation index of the applicable code of civil proce- The court automation index has four dure encompassing substantially all Quality of judicial processes index components: its aspects. A score of 0.5 is assigned The quality of judicial processes index ƒƒ Whether the initial complaint can if yes; 0 if no. is the sum of the scores on the court be filed electronically through a ƒƒ Whether commercial disputes of all structure and proceedings, case man- dedicated platform (not e-mail or fax) kinds—aside from those dealing with agement, court automation and alterna- within the relevant court. A score of 1 public order, public policy, bankruptcy, tive dispute resolution indices. The index is assigned if yes; 0 if no. consumer rights, employment issues ranges from 0 to 18, with higher values ƒƒ Whether the initial complaint can be or intellectual property—can be sub- indicating better and more efficient served on the defendant electroni- mitted to arbitration. A score of 0.5 is judicial processes. cally, through a dedicated system or assigned if yes; 0 if no. by e-mail, fax or SMS (short message ƒƒ Whether valid arbitration clauses The data details on enforcing contracts can service). A score of 1 is assigned if yes; or agreements are enforced by local be found for each economy at http://www 0 if no. courts in more than 50% of cases. .doingbusiness.org. This methodology was ƒƒ Whether court fees can be paid elec- A score of 0.5 is assigned if yes; 0 initially developed by Simeon Djankov, tronically, either through a dedicated if no. Rafael La Porta, Florencio López-de-Silanes platform or through online banking. A ƒƒ Whether voluntary mediation, con- and Andrei Shleifer (“Courts,” Quarterly score of 1 is assigned if yes; 0 if no. ciliation or both are a recognized way Journal of Economics 118, no. 2 [2003]: ƒƒ Whether judgments rendered by of resolving commercial disputes. A 453-517) and is adopted here with several local courts are made available to the score of 0.5 is assigned if yes; 0 if no. changes. The quality of judicial processes general public through publication in ƒƒ Whether voluntary mediation, index was introduced in Doing Business official gazettes, in newspapers or on conciliation or both are governed by 2016. The good practices tested in this index the internet. A score of 1 is assigned a consolidated law or consolidated were developed on the basis of internation- if judgments rendered in commercial chapter or section of the applicable ally recognized good practices promoting cases at all levels are made available code of civil procedure encompassing judicial efficiency. 118 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA NOTES 1. For more information, see the data notes in the Doing Business 2017 report. 2. According to a study based on evidence from India between 1994 and 2005, a higher- quality electricity supply, with no more than two outages a week (or no more than about 100 a year), leads to higher nonagricultural incomes. Ujjayant Chakravorty, Martino Pelli and Beyza P. Ural Marchand, “Does the Quality of Electricity Matter? Evidence from Rural India,” FEEM Working Paper 11.2014 (Fondazione Eni Enrico Mattei, Milan, 2014). 119 City Snapshots BULGARIA BURGAS (Bulgaria) Starting a business (rank) 3 Dealing with construction permits (rank) 11 Distance to frontier score (0–100) 90.05 Distance to frontier score (0–100) 69.23 Procedures (number) 5 Procedures (number) 19 Time (days) 16 Time (days) 133 Cost (% of income per capita) 1.3 Cost (% of warehouse value) 4.6 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 3 Registering property (rank) 18 Distance to frontier score (0–100) 65.49 Distance to frontier score (0–100) 70.67 Procedures (number) 5 Procedures (number) 8 Time (days) 227 Time (days) 14 Cost (% of income per capita) 107.1 Cost (% of property value) 2.9 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 20 Enforcing contracts (rank) 15 Distance to frontier score (0–100) 72.68 Time (days) 361 Cost (% of claim) 15.9 Quality of judicial processes index (0–18) 10 PLEVEN (Bulgaria) Starting a business (rank) 2 Dealing with construction permits (rank) 8 Distance to frontier score (0–100) 90.50 Distance to frontier score (0–100) 71.92 Procedures (number) 5 Procedures (number) 18 Time (days) 14 Time (days) 152 Cost (% of income per capita) 1.8 Cost (% of warehouse value) 2.1 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 13 Registering property (rank) 19 Distance to frontier score (0–100) 54.66 Distance to frontier score (0–100) 70.44 Procedures (number) 6 Procedures (number) 8 Time (days) 258 Time (days) 11 Cost (% of income per capita) 516.3 Cost (% of property value) 3.3 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 20 Enforcing contracts (rank) 12 Distance to frontier score (0–100) 73.63 Time (days) 289 Cost (% of claim) 18.6 Quality of judicial processes index (0–18) 10 120 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA PLOVDIV (Bulgaria) Starting a business (rank) 3 Dealing with construction permits (rank) 12 Distance to frontier score (0–100) 90.05 Distance to frontier score (0–100) 68.30 Procedures (number) 5 Procedures (number) 20 Time (days) 16 Time (days) 162 Cost (% of income per capita) 1.3 Cost (% of warehouse value) 2.9 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 5 Registering property (rank) 21 Distance to frontier score (0–100) 65.06 Distance to frontier score (0–100) 69.59 Procedures (number) 5 Procedures (number) 8 Time (days) 231 Time (days) 16 Cost (% of income per capita) 107.1 Cost (% of property value) 2.9 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 19 Enforcing contracts (rank) 17 Distance to frontier score (0–100) 72.36 Time (days) 440 Cost (% of claim) 18.4 Quality of judicial processes index (0–18) 11.5 RUSE (Bulgaria) Starting a business (rank) 11 Dealing with construction permits (rank) 9 Distance to frontier score (0–100) 88.33 Distance to frontier score (0–100) 71.34 Procedures (number) 6 Procedures (number) 18 Time (days) 17 Time (days) 165 Cost (% of income per capita) 1.3 Cost (% of warehouse value) 1.9 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 12 Registering property (rank) 17 Distance to frontier score (0–100) 54.71 Distance to frontier score (0–100) 71.53 Procedures (number) 5 Procedures (number) 8 Time (days) 240 Time (days) 11 Cost (% of income per capita) 107.1 Cost (% of property value) 2.6 Reliability of supply and transparency of tariffs index (0–8) 4 Quality of land administration index (0–30) 20 Enforcing contracts (rank) 7 Distance to frontier score (0–100) 75.38 Time (days) 321 Cost (% of claim) 19.0 Quality of judicial processes index (0–18) 11.5 CITY SNAPSHOTS 121 SOFIA (Bulgaria) Starting a business (rank) 21 Dealing with construction permits (rank) 6 Distance to frontier score (0–100) 86.82 Distance to frontier score (0–100) 72.75 Procedures (number) 6 Procedures (number) 18 Time (days) 23 Time (days) 97 Cost (% of income per capita) 1.3 Cost (% of warehouse value) 4.6 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 14 Registering property (rank) 22 Distance to frontier score (0–100) 54.64 Distance to frontier score (0–100) 69.23 Procedures (number) 6 Procedures (number) 8 Time (days) 262 Time (days) 19 Cost (% of income per capita) 523.0 Cost (% of property value) 2.9 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 19 Enforcing contracts (rank) 20 Distance to frontier score (0–100) 67.04 Time (days) 564 Cost (% of claim) 18.6 Quality of judicial processes index (0–18) 10.5 VARNA (Bulgaria) Starting a business (rank) 1 Dealing with construction permits (rank) 10 Distance to frontier score (0–100) 90.56 Distance to frontier score (0–100) 70.53 Procedures (number) 5 Procedures (number) 19 Time (days) 14 Time (days) 135 Cost (% of income per capita) 1.3 Cost (% of warehouse value) 3.4 Paid-in minimum capital (% of income per capita) 0.0 Building quality control index (0–15) 13 Getting electricity (rank) 10 Registering property (rank) 20 Distance to frontier score (0–100) 59.05 Distance to frontier score (0–100) 70.19 Procedures (number) 5 Procedures (number) 8 Time (days) 200 Time (days) 11 Cost (% of income per capita) 107.1 Cost (% of property value) 3.4 Reliability of supply and transparency of tariffs index (0–8) 4 Quality of land administration index (0–30) 20 Enforcing contracts (rank) 9 Distance to frontier score (0–100) 74.23 Time (days) 395 Cost (% of claim) 16.7 Quality of judicial processes index (0–18) 11.5 122 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA HUNGARY BUDAPEST (Hungary) Starting a business (rank) 20 Dealing with construction permits (rank) 13 Distance to frontier score (0–100) 87.28 Distance to frontier score (0–100) 67.89 Procedures (number) 6 Procedures (number) 20 Time (days) 7 Time (days) 205.5 Cost (% of income per capita) 7.1 Cost (% of warehouse value) 0.7 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 7 Registering property (rank) 6 Distance to frontier score (0–100) 63.25 Distance to frontier score (0–100) 80.08 Procedures (number) 5 Procedures (number) 4 Time (days) 257 Time (days) 17.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 11 Distance to frontier score (0–100) 73.75 Time (days) 605 Cost (% of claim) 15.0 Quality of judicial processes index (0–18) 14 DEBRECEN (Hungary) Starting a business (rank) 13 Dealing with construction permits (rank) 7 Distance to frontier score (0–100) 87.61 Distance to frontier score (0–100) 72.71 Procedures (number) 6 Procedures (number) 18 Time (days) 6 Time (days) 171.5 Cost (% of income per capita) 6.5 Cost (% of warehouse value) 0.4 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 6 Registering property (rank) 1 Distance to frontier score (0–100) 63.36 Distance to frontier score (0–100) 81.16 Procedures (number) 5 Procedures (number) 4 Time (days) 247 Time (days) 8.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 1 Distance to frontier score (0–100) 81.72 Time (days) 330 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 CITY SNAPSHOTS 123 GYOR (Hungary) Starting a business (rank) 18 Dealing with construction permits (rank) 5 Distance to frontier score (0–100) 87.32 Distance to frontier score (0–100) 73.35 Procedures (number) 6 Procedures (number) 18 Time (days) 7 Time (days) 161.5 Cost (% of income per capita) 6.8 Cost (% of warehouse value) 0.4 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 7 Registering property (rank) 4 Distance to frontier score (0–100) 63.25 Distance to frontier score (0–100) 80.80 Procedures (number) 5 Procedures (number) 4 Time (days) 277 Time (days) 11.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 10 Distance to frontier score (0–100) 74.20 Time (days) 605 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 MISKOLC (Hungary) Starting a business (rank) 13 Dealing with construction permits (rank) 4 Distance to frontier score (0–100) 87.61 Distance to frontier score (0–100) 73.47 Procedures (number) 6 Procedures (number) 18 Time (days) 6 Time (days) 158.5 Cost (% of income per capita) 6.5 Cost (% of warehouse value) 0.5 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 9 Registering property (rank) 2 Distance to frontier score (0–100) 61.76 Distance to frontier score (0–100) 80.92 Procedures (number) 5 Procedures (number) 4 Time (days) 233 Time (days) 10.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 2 Distance to frontier score (0–100) 79.53 Time (days) 410 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 124 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA PECS (Hungary) Starting a business (rank) 13 Dealing with construction permits (rank) 1 Distance to frontier score (0–100) 87.61 Distance to frontier score (0–100) 75.58 Procedures (number) 6 Procedures (number) 17 Time (days) 6 Time (days) 144.5 Cost (% of income per capita) 6.5 Cost (% of warehouse value) 0.4 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 4 Registering property (rank) 7 Distance to frontier score (0–100) 65.21 Distance to frontier score (0–100) 79.96 Procedures (number) 5 Procedures (number) 4 Time (days) 230 Time (days) 18.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 4 Distance to frontier score (0–100) 77.07 Time (days) 500 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 SZEGED (Hungary) Starting a business (rank) 16 Dealing with construction permits (rank) 2 Distance to frontier score (0–100) 87.57 Distance to frontier score (0–100) 74.38 Procedures (number) 6 Procedures (number) 18 Time (days) 6 Time (days) 147.5 Cost (% of income per capita) 6.8 Cost (% of warehouse value) 0.4 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 1 Registering property (rank) 4 Distance to frontier score (0–100) 67.46 Distance to frontier score (0–100) 80.80 Procedures (number) 5 Procedures (number) 4 Time (days) 238 Time (days) 11.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 8 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 6 Distance to frontier score (0–100) 75.98 Time (days) 540 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 CITY SNAPSHOTS 125 SZEKESFEHERVAR (Hungary) Starting a business (rank) 18 Dealing with construction permits (rank) 3 Distance to frontier score (0–100) 87.32 Distance to frontier score (0–100) 73.70 Procedures (number) 6 Procedures (number) 18 Time (days) 7 Time (days) 155.5 Cost (% of income per capita) 6.8 Cost (% of warehouse value) 0.5 Paid-in minimum capital (% of income per capita) 45.5 Building quality control index (0–15) 13 Getting electricity (rank) 2 Registering property (rank) 2 Distance to frontier score (0–100) 65.53 Distance to frontier score (0–100) 80.92 Procedures (number) 5 Procedures (number) 4 Time (days) 227 Time (days) 10.5 Cost (% of income per capita) 93.9 Cost (% of property value) 5.0 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 26 Enforcing contracts (rank) 3 Distance to frontier score (0–100) 79.12 Time (days) 425 Cost (% of claim) 13.8 Quality of judicial processes index (0–18) 14 ROMANIA BRASOV (Romania) Starting a business (rank) 9 Dealing with construction permits (rank) 17 Distance to frontier score (0–100) 88.78 Distance to frontier score (0–100) 56.28 Procedures (number) 6 Procedures (number) 26 Time (days) 15 Time (days) 247 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 2.8 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 19 Registering property (rank) 9 Distance to frontier score (0–100) 49.56 Distance to frontier score (0–100) 74.65 Procedures (number) 9 Procedures (number) 6 Time (days) 181 Time (days) 16 Cost (% of income per capita) 476.9 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 22 Distance to frontier score (0–100) 64.24 Time (days) 689 Cost (% of claim) 21.9 Quality of judicial processes index (0–18) 11.5 126 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA BUCHAREST (Romania) Starting a business (rank) 5 Dealing with construction permits (rank) 15 Distance to frontier score (0–100) 89.53 Distance to frontier score (0–100) 58.09 Procedures (number) 6 Procedures (number) 24 Time (days) 12 Time (days) 260 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 2.2 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 15 Registering property (rank) 9 Distance to frontier score (0–100) 53.23 Distance to frontier score (0–100) 74.65 Procedures (number) 9 Procedures (number) 6 Time (days) 174 Time (days) 16 Cost (% of income per capita) 546.5 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 18 Distance to frontier score (0–100) 72.25 Time (days) 512 Cost (% of claim) 25.8 Quality of judicial processes index (0–18) 14 CLUJ-NAPOCA (Romania) Starting a business (rank) 9 Dealing with construction permits (rank) 20 Distance to frontier score (0–100) 88.78 Distance to frontier score (0–100) 54.32 Procedures (number) 6 Procedures (number) 27 Time (days) 15 Time (days) 275 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 1.9 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 18 Registering property (rank) 16 Distance to frontier score (0–100) 50.41 Distance to frontier score (0–100) 73.81 Procedures (number) 9 Procedures (number) 6 Time (days) 202 Time (days) 16 Cost (% of income per capita) 473.8 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 16 Enforcing contracts (rank) 14 Distance to frontier score (0–100) 73.34 Time (days) 527 Cost (% of claim) 21.8 Quality of judicial processes index (0–18) 14 CITY SNAPSHOTS 127 CONSTANTA (Romania) Starting a business (rank) 17 Dealing with construction permits (rank) 21 Distance to frontier score (0–100) 87.52 Distance to frontier score (0–100) 49.26 Procedures (number) 6 Procedures (number) 25 Time (days) 20 Time (days) 307 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 5.7 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 20 Registering property (rank) 9 Distance to frontier score (0–100) 49.06 Distance to frontier score (0–100) 74.65 Procedures (number) 9 Procedures (number) 6 Time (days) 209 Time (days) 16 Cost (% of income per capita) 666.3 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 8 Distance to frontier score (0–100) 75.04 Time (days) 495 Cost (% of claim) 19.6 Quality of judicial processes index (0–18) 14 CRAIOVA (Romania) Starting a business (rank) 22 Dealing with construction permits (rank) 14 Distance to frontier score (0–100) 86.27 Distance to frontier score (0–100) 61.31 Procedures (number) 6 Procedures (number) 25 Time (days) 25 Time (days) 206 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 1.9 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 16 Registering property (rank) 9 Distance to frontier score (0–100) 53.01 Distance to frontier score (0–100) 74.65 Procedures (number) 9 Procedures (number) 6 Time (days) 177 Time (days) 16 Cost (% of income per capita) 511.1 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 13 Distance to frontier score (0–100) 73.37 Time (days) 491 Cost (% of claim) 19.4 Quality of judicial processes index (0–18) 13 128 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA IASI (Romania) Starting a business (rank) 12 Dealing with construction permits (rank) 18 Distance to frontier score (0–100) 88.28 Distance to frontier score (0–100) 56.01 Procedures (number) 6 Procedures (number) 26 Time (days) 17 Time (days) 266 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 1.9 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 11 Registering property (rank) 9 Distance to frontier score (0–100) 57.76 Distance to frontier score (0–100) 74.65 Procedures (number) 8 Procedures (number) 6 Time (days) 173 Time (days) 16 Cost (% of income per capita) 463.9 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 16 Distance to frontier score (0–100) 72.64 Time (days) 522 Cost (% of claim) 16.6 Quality of judicial processes index (0–18) 12.5 ORADEA (Romania) Starting a business (rank) 5 Dealing with construction permits (rank) 16 Distance to frontier score (0–100) 89.53 Distance to frontier score (0–100) 57.84 Procedures (number) 6 Procedures (number) 25 Time (days) 12 Time (days) 156 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 7.6 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 17 Registering property (rank) 8 Distance to frontier score (0–100) 50.80 Distance to frontier score (0–100) 75.48 Procedures (number) 9 Procedures (number) 6 Time (days) 199 Time (days) 16 Cost (% of income per capita) 454.8 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 7 Quality of land administration index (0–30) 18 Enforcing contracts (rank) 19 Distance to frontier score (0–100) 72.01 Time (days) 549 Cost (% of claim) 18.8 Quality of judicial processes index (0–18) 13 CITY SNAPSHOTS 129 PLOIESTI (Romania) Starting a business (rank) 5 Dealing with construction permits (rank) 19 Distance to frontier score (0–100) 89.53 Distance to frontier score (0–100) 54.40 Procedures (number) 6 Procedures (number) 27 Time (days) 12 Time (days) 268 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 2.3 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 21 Registering property (rank) 15 Distance to frontier score (0–100) 47.22 Distance to frontier score (0–100) 74.64 Procedures (number) 9 Procedures (number) 6 Time (days) 204 Time (days) 16 Cost (% of income per capita) 423.7 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 21 Distance to frontier score (0–100) 65.86 Time (days) 653 Cost (% of claim) 20.2 Quality of judicial processes index (0–18) 11.5 TIMISOARA (Romania) Starting a business (rank) 5 Dealing with construction permits (rank) 22 Distance to frontier score (0–100) 89.53 Distance to frontier score (0–100) 48.92 Procedures (number) 6 Procedures (number) 27 Time (days) 12 Time (days) 315 Cost (% of income per capita) 1.5 Cost (% of warehouse value) 3.9 Paid-in minimum capital (% of income per capita) 0.6 Building quality control index (0–15) 13 Getting electricity (rank) 22 Registering property (rank) 9 Distance to frontier score (0–100) 43.56 Distance to frontier score (0–100) 74.65 Procedures (number) 9 Procedures (number) 6 Time (days) 234 Time (days) 16 Cost (% of income per capita) 553.1 Cost (% of property value) 1.4 Reliability of supply and transparency of tariffs index (0–8) 6 Quality of land administration index (0–30) 17 Enforcing contracts (rank) 5 Distance to frontier score (0–100) 76.13 Time (days) 455 Cost (% of claim) 19.6 Quality of judicial processes index (0–18) 14 130 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Indicator Snapshots STARTING A BUSINESS Paid-in minimum Ease of starting Distance to Cost capital a business frontier score Procedures Time (% of income (% of income per City (Country) (rank) (0–100) (number) (days) per capita) capita) Burgas (Bulgaria) 3 90.05 5 16 1.3 0.0 Pleven (Bulgaria) 2 90.50 5 14 1.8 0.0 Plovdiv (Bulgaria) 3 90.05 5 16 1.3 0.0 Ruse (Bulgaria) 11 88.33 6 17 1.3 0.0 Sofia (Bulgaria) 21 86.82 6 23 1.3 0.0 Varna (Bulgaria) 1 90.56 5 14 1.3 0.0 Budapest (Hungary) 20 87.28 6 7 7.1 45.5 Debrecen (Hungary) 13 87.61 6 6 6.5 45.5 Gyor (Hungary) 18 87.32 6 7 6.8 45.5 Miskolc (Hungary) 13 87.61 6 6 6.5 45.5 Pecs (Hungary) 13 87.61 6 6 6.5 45.5 Szeged (Hungary) 16 87.57 6 6 6.8 45.5 Szekesfehervar (Hungary) 18 87.32 6 7 6.8 45.5 Brasov (Romania) 9 88.78 6 15 1.5 0.6 Bucharest (Romania) 5 89.53 6 12 1.5 0.6 Cluj-Napoca (Romania) 9 88.78 6 15 1.5 0.6 Constanta (Romania) 17 87.52 6 20 1.5 0.6 Craiova (Romania) 22 86.27 6 25 1.5 0.6 Iasi (Romania) 12 88.28 6 17 1.5 0.6 Oradea (Romania) 5 89.53 6 12 1.5 0.6 Ploiesti (Romania) 5 89.53 6 12 1.5 0.6 Timisoara (Romania) 5 89.53 6 12 1.5 0.6 INDICATOR SNAPSHOTS 131 DEALING WITH CONSTRUCTION PERMITS Ease of dealing with construction Distance to Cost Building quality permits frontier score Procedures Time (% of warehouse control index City (Country) (rank) (0–100) (number) (days) value) (0–15) Burgas (Bulgaria) 11 69.23 19 133 4.6 13 Pleven (Bulgaria) 8 71.92 18 152 2.1 13 Plovdiv (Bulgaria) 12 68.30 20 162 2.9 13 Ruse (Bulgaria) 9 71.34 18 165 1.9 13 Sofia (Bulgaria) 6 72.75 18 97 4.6 13 Varna (Bulgaria) 10 70.53 19 135 3.4 13 Budapest (Hungary) 13 67.89 20 205.5 0.7 13 Debrecen (Hungary) 7 72.71 18 171.5 0.4 13 Gyor (Hungary) 5 73.35 18 161.5 0.4 13 Miskolc (Hungary) 4 73.47 18 158.5 0.5 13 Pecs (Hungary) 1 75.58 17 144.5 0.4 13 Szeged (Hungary) 2 74.38 18 147.5 0.4 13 Szekesfehervar (Hungary) 3 73.70 18 155.5 0.5 13 Brasov (Romania) 17 56.28 26 247 2.8 13 Bucharest (Romania) 15 58.09 24 260 2.2 13 Cluj-Napoca (Romania) 20 54.32 27 275 1.9 13 Constanta (Romania) 21 49.26 25 307 5.7 13 Craiova (Romania) 14 61.31 25 206 1.9 13 Iasi (Romania) 18 56.01 26 266 1.9 13 Oradea (Romania) 16 57.84 25 156 7.6 13 Ploiesti (Romania) 19 54.40 27 268 2.3 13 Timisoara (Romania) 22 48.92 27 315 3.9 13 132 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA GETTING ELECTRICITY Reliability of supply and Ease of getting Distance to Cost transparency electricity frontier score Procedures Time (% of income of tariffs index City (Country) (rank) (0–100) (number) (days) per capita) (0–8) Burgas (Bulgaria) 3 65.49 5 227 107.1 7 Pleven (Bulgaria) 13 54.66 6 258 516.3 6 Plovdiv (Bulgaria) 5 65.06 5 231 107.1 7 Ruse (Bulgaria) 12 54.71 5 240 107.1 4 Sofia (Bulgaria) 14 54.64 6 262 523.0 6 Varna (Bulgaria) 10 59.05 5 200 107.1 4 Budapest (Hungary) 7 63.25 5 257 93.9 7 Debrecen (Hungary) 6 63.36 5 247 93.9 7 Gyor (Hungary) 7 63.25 5 277 93.9 7 Miskolc (Hungary) 9 61.76 5 233 93.9 6 Pecs (Hungary) 4 65.21 5 230 93.9 7 Szeged (Hungary) 1 67.46 5 238 93.9 8 Szekesfehervar (Hungary) 2 65.53 5 227 93.9 7 Brasov (Romania) 19 49.56 9 181 476.9 6 Bucharest (Romania) 15 53.23 9 174 546.5 7 Cluj-Napoca (Romania) 18 50.41 9 202 473.8 7 Constanta (Romania) 20 49.06 9 209 666.3 7 Craiova (Romania) 16 53.01 9 177 511.1 7 Iasi (Romania) 11 57.76 8 173 463.9 7 Oradea (Romania) 17 50.80 9 199 454.8 7 Ploiesti (Romania) 21 47.22 9 204 423.7 6 Timisoara (Romania) 22 43.56 9 234 553.1 6 INDICATOR SNAPSHOTS 133 REGISTERING PROPERTY Ease of Quality of land registering Distance to Cost administration property frontier score Procedures Time (% of index City (Country) (rank) (0–100) (number) (days) property value) (0–30) Burgas (Bulgaria) 18 70.67 8 14 2.9 20 Pleven (Bulgaria) 19 70.44 8 11 3.3 20 Plovdiv (Bulgaria) 21 69.59 8 16 2.9 19 Ruse (Bulgaria) 17 71.53 8 11 2.6 20 Sofia (Bulgaria) 22 69.23 8 19 2.9 19 Varna (Bulgaria) 20 70.19 8 11 3.4 20 Budapest (Hungary) 6 80.08 4 17.5 5.0 26 Debrecen (Hungary) 1 81.16 4 8.5 5.0 26 Gyor (Hungary) 4 80.80 4 11.5 5.0 26 Miskolc (Hungary) 2 80.92 4 10.5 5.0 26 Pecs (Hungary) 7 79.96 4 18.5 5.0 26 Szeged (Hungary) 4 80.80 4 11.5 5.0 26 Szekesfehervar (Hungary) 2 80.92 4 10.5 5.0 26 Brasov (Romania) 9 74.65 6 16 1.4 17 Bucharest (Romania) 9 74.65 6 16 1.4 17 Cluj-Napoca (Romania) 16 73.81 6 16 1.4 16 Constanta (Romania) 9 74.65 6 16 1.4 17 Craiova (Romania) 9 74.65 6 16 1.4 17 Iasi (Romania) 9 74.65 6 16 1.4 17 Oradea (Romania) 8 75.48 6 16 1.4 18 Ploiesti (Romania) 15 74.64 6 16 1.4 17 Timisoara (Romania) 9 74.65 6 16 1.4 17 134 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA ENFORCING CONTRACTS Ease of enforcing Distance to Quality of judicial contracts frontier score Time Cost processes index City (Country) (rank) (0–100) (days) (% of claim) (0–18) Burgas (Bulgaria) 15 72.68 361 15.9 10 Pleven (Bulgaria) 12 73.63 289 18.6 10 Plovdiv (Bulgaria) 17 72.36 440 18.4 11.5 Ruse (Bulgaria) 7 75.38 321 19.0 11.5 Sofia (Bulgaria) 20 67.04 564 18.6 10.5 Varna (Bulgaria) 9 74.23 395 16.7 11.5 Budapest (Hungary) 11 73.75 605 15.0 14 Debrecen (Hungary) 1 81.72 330 13.8 14 Gyor (Hungary) 10 74.20 605 13.8 14 Miskolc (Hungary) 2 79.53 410 13.8 14 Pecs (Hungary) 4 77.07 500 13.8 14 Szeged (Hungary) 6 75.98 540 13.8 14 Szekesfehervar (Hungary) 3 79.12 425 13.8 14 Brasov (Romania) 22 64.24 689 21.9 11.5 Bucharest (Romania) 18 72.25 512 25.8 14 Cluj-Napoca (Romania) 14 73.34 527 21.8 14 Constanta (Romania) 8 75.04 495 19.6 14 Craiova (Romania) 13 73.37 491 19.4 13 Iasi (Romania) 16 72.64 522 16.6 12.5 Oradea (Romania) 19 72.01 549 18.8 13 Ploiesti (Romania) 21 65.86 653 20.2 11.5 Timisoara (Romania) 5 76.13 455 19.6 14 Indicator Details STARTING A BUSINESS IN BULGARIA - PROCEDURES REQUIRED TO START A BUSINESS, BY CITY Standard company legal form: Druzestvo s Ogranichena Otgovornost (DOO) Minimum capital requirement: BGN 2 Data as of: December 31, 2016 Burgas Pleven Plovdiv Ruse Sofia Varna Comments 1. Execute the minutes of the constituent meeting Time (days) 1 1 1 1 1 1 Under the Commercial Act, each newly appointed general of the shareholders in the DOO; obtain a notary manager must sign and submit several affidavits. A notary fee certified statement of consent and signature of BGN 5 is charged for certifying the signature specimen of the specimen of the manager, and a certified copy of Cost (BGN) 5 5 5 5 5 5 manager. the articles of incorporation of the DOO 2. Deposit paid-up capital in a bank Time (days) 1 1 1 1 1 1 The Commercial Act requires the minimum capital prescribed by law, i.e. BGN 2, to be paid-in prior to incorporation. After opening the account and depositing the funds, a certificate Cost (BGN) 20 20 20 20 20 20 evidencing the deposit of the capital is issued. 3. Register with the Commercial Register Time (days) 2 2 2 2 2 2 As per amendment of Commercial Registry Act from July 2015, at the Registry Agency the applications have to be reviewed by registry officials by the end of the next business day. Business, corporate income tax Cost (BGN) 55 110** 55 55 55 55 and statistics registrations can all be completed at the one-stop shop of the Registry Agency. 4. Register for VAT at the office of the National Time (days) 12 10 12 12 12 10 A company may voluntarily register for VAT purposes at any time Revenue Agency since the threshold requirement has been abolished. A company must register for VAT purposes if its turnover for 12 consecutive Cost (BGN) no cost no cost no cost no cost no cost no cost months exceeds BGN 50,000. 5. Purchase fiscal device (cash register) and Time (days) 2 2 2 2 2 2 At start of operations, the company purchases the fiscal device register it with the National Revenue Agency from a licensed provider. After installation, the registration of (NRA)* the fiscal device with NRA is performed electronically. The price Cost (BGN) 75 75 75 75 75 75 of the device varies depending on the service provided, cash register model, installation fee and training fee. 6. Notify the municipality about commercial Time (days) n/a n/a n/a 1 7 n/a As per local ordinance, companies need to inform the activity municipality about the type of activity they will perform. An application (2 copies) is submitted, along with the company certificate of good standing and a lease contract or proof of Cost (BGN) n/a n/a n/a no cost no cost n/a ownership of business premises. In Sofia, a municipal inspector is dispatched at the company premises. Source: Doing Business database. *Takes place simultaneously with another procedure. **Among the cities surveyed, Pleven is the only one where the majority of limited liability companies use paper-based registration, which costs BGN 110. Those using the online platform pay half that price: BGN 55. INDICATOR DETAILS - STARTING A BUSINESS 135 136 STARTING A BUSINESS IN HUNGARY - PROCEDURES REQUIRED TO START A BUSINESS, BY CITY Standard company legal form: Korlátolt felelősségű társaság (Kft) Minimum capital requirement: HUF 1,500,000 Data as of: December 31, 2016 Budapest Debrecen Gyor Miskolc Pecs Szeged Szekesfehervar Comments 1. Hire a lawyer who will Time (days) 1 1 1 1 1 1 1 The company must be represented by a lawyer represent the company; create during the registration process. The lawyer's the company deed and prepare commission fee is subject to free agreement and it any other necessary legal depends on the complexity of the case. Cost (HUF) 180,000 160,000 170,000 160,000 160,000 170,000 170,000 documents 2. Open a bank account Time (days) 1 1 1 1 1 1 1 Companies open a bank account and deposit the and deposit at least 50% of subscription amount according to the provisions of subscription amount the Articles of Association. Cost (HUF) no cost no cost no cost no cost no cost no cost no cost 3. Apply for registration at the Time (days) 2 1 2 1 1 1 2 The Court of Registration also registers companies Court of Registration (simplified with the Tax Authority (for VAT and income tax electronic registration) purposes) and with the Statistical Office through an online system. In the simplified electronic filing, the Cost (HUF) 50,000 50,000 50,000 50,000 50,000 50,000 50,000 companies must use a standardized template for the articles of association. 4. Register for social security Time (days) 1 1 1 1 1 1 1 The company needs to register with the Hungarian Social Security Office. Cost (HUF) no cost no cost no cost no cost no cost no cost no cost 5. Register with the Hungarian Time (days) 1 1 1 1 1 1 1 Economic actors whose registration in the register Chamber of Commerce and of companies is mandatory shall within 5 days after Industry* registration apply for registration in the regional Chamber of Commerce of competence. The annual Cost (HUF) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 contribution is HUF 5,000. DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 6. Registration for municipal Time (days) 1 1 1 1 1 1 1 The law allows municipalities to charge a roster of business tax* taxes (e.g., business, land, tourism). Municipalities can choose which to apply and the rate. Companies have to register with the municipality within 15 Cost (HUF) no cost no cost no cost no cost no cost no cost no cost days after incorporation. The limit set by law for the municipal business tax is 2.5% of revenue; from here downward, each municipality can decide on rebates. Source: Doing Business database. *Takes place simultaneously with another procedure. STARTING A BUSINESS IN ROMANIA - PROCEDURES REQUIRED TO START A BUSINESS, BY CITY Standard company legal form: Societate comercialã cu rãspundere limitatã (SRL) Minimum capital requirement: RON 200 Data as of: December 31, 2016 Brasov Bucharest Cluj-Napoca Constanta Craiova Iasi Oradea Ploiesti Timisoara Comments 1. Obtain evidence of availability Time (days) 1 1 1 1 1 1 1 1 1 The name verification and reservation thereof of company name and reserve can be done in person at the Trade Register name Office or online using e-signatures. The name reservation is valid for a period of 3 months. Cost (RON) 72 72 72 72 72 72 72 72 72 2. Deposit funds in a bank and Time (days) 1 1 1 1 1 1 1 1 1 obtain a document confirming bank deposit of sufficient funds Cost (RON) no cost no cost no cost no cost no cost no cost no cost no cost no cost 3. Register company at the Trade Time (days) 3 3 3 3 3 3 3 3 3 Registration ensures the following: (i) company Register Office incorporation; (ii) fiscal registration; (iii) authorization, based on statements of own responsibility, in the field of food safety and Cost (RON) 431.5 431.5 431.5 431.5 431.5 431.5 431.5 431.5 431.5 sanitary, labor and environment protection; (iv) publication in the Official Gazette. 4. Register for VAT at the Time (days) 10 7 10 15 20 12 7 7 7 If a company requests the VAT registration at Regional General Directorate for the moment of incorporation, Form 098 must be Public Finances submitted to the Tax Authorities, who will assess the capacity and the intention of the applicant Cost (RON) no cost no cost no cost no cost no cost no cost no cost no cost no cost to perform operations which are subject to VAT. 5. Register the employees Time (days) 1 1 1 1 1 1 1 1 1 Employers have to settle an internal general contracts with the Territorial register record of all employees, which shall be Labor Inspectorate* transmitted to the Territorial Labour Inspectorate in the jurisdiction the employer has its registered Cost (RON) no cost no cost no cost no cost no cost no cost no cost no cost no cost office. 6. Purchase the company's Time (days) 1 1 1 3** 1 1 1 1 1 The Registry is used to record inspections carried unique registry for controls from out by control bodies: financial, consumer the local Administration for protection, urban planning, labor, fire protection, Public Finances* etc. It must be purchased within 30 days Cost (RON) 30 30 30 30 30 30 30 30 30 after the company was registered at the Trade Registry. Source: Doing Business database. *Takes place simultaneously with another procedure. **The registry can be purchased only on Tuesdays and Thursdays from the local office of the Tax Administration, located at the Treasury in Constanta. INDICATOR DETAILS - STARTING A BUSINESS 137 138 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 7. Obtain final building Procedure 15. Register the technical permit from the Chief Architect of the passport with the Burgas Municipality LIST OF PROCEDURES Burgas Municipality Agency: Burgas Municipality DEALING WITH CONSTRUCTION Agency: Burgas Municipality Time: 3 days PERMITS Time: 35 days Cost: None Cost: BGN 10,405 (BGN 8 per square meter) BULGARIA Procedure 16. File a copy of the Burgas (Bulgaria) Procedure 8. Obtain approval for registered technical passport at the opening a construction site and Geodesy, Cartography and Cadastre Warehouse value: BGN 576,682 (US$361,000) Data as of: December 31, 2016 determining construction line and Agency (GCCA) in Burgas construction level Agency: Geodesy, Cartography and Cadastre Agency: Burgas Municipality Agency (GCCA) in Burgas Procedure 1. Obtain current cadastral Time: 4 days Time: 1 day extract from the Geodesy, Cartography Cost: BGN 150 Cost: None and Cadastre Agency (GCCA) in Burgas Agency: Geodesy, Cartography and Cadastre Agency (GCCA) in Burgas Procedure 9. Obtain approval from Procedure 17. Receive final inspection Time: 1 day Burgas Municipality on the carcass by the Burgas Municipality Cost: BGN 90 construction Agency: Burgas Municipality Agency: Burgas Municipality Time: 1 day Procedure 2. Apply for project visa Time: 10 days Cost: None from the Chief Architect of the Burgas Cost: BGN 100 Municipality Procedure 18. Obtain certificate for the Agency: Burgas Municipality Procedure 10. Obtain geodetic approval of use of the building from the Time: 14 days measurements from a licensed company Burgas Municipality Cost: BGN 100 Agency: Licensed company Agency: Burgas Municipality Time: 7 days Time: 21 days Procedure 3. Obtain decision from the Cost: BGN 438 (Price is based on agreement Cost: BGN 2,000 Regional Inspectorate of Environment with the licensed company) and Water Procedure 19*. Sign final contract with Agency: Regional Inspectorate of Environment Procedure 11*. Open a water and the water provider and Water - Burgas sewerage batch Agency: Water Supply and Sewerage - Burgas Time: 18 days Agency: Water Supply and Sewerage - Burgas Time: 19 days Cost: None Time: 1 day Cost: BGN 30 Cost: BGN 25 Procedure 4*. Sign preliminary contract DEALING WITH CONSTRUCTION PERMITS with the water company Agency: Water Supply and Sewerage - Burgas Procedure 12. Map the building in Pleven (Bulgaria) Time: 14 days the cadastral map at the Geodesy, Warehouse value: BGN 576,682 (US$361,000) Cost: BGN 60 Cartography and Cadastre Agency Data as of: December 31, 2016 (GCCA) in Burgas and receive Procedure 5*. Obtain preliminary registration certificate Procedure 1. Obtain current cadastral assessment of the building for its Agency: Geodesy, Cartography and Cadastre extract from the Geodesy, Cartography compliance with energy efficiency Agency (GCCA) in Burgas and Cadastre Agency (GCCA) in Pleven requirements from licensed company Time: 3 days Agency: Geodesy, Cartography and Cadastre Agency: Licensed company Cost: BGN 124 Agency (GCCA) in Pleven Time: 7 days Time: 1 day Cost: BGN 2,450 (Price calculated per square Procedure 13. Obtain energy efficiency Cost: BGN 90 meter and based on agreement) certificate Agency: Licensed company Procedure 2. Apply for project visa Procedure 6. Sign contract with licensed Time: 7 days from the Chief Architect of the Pleven supervision company and obtain Cost: BGN 1,950 Municipality evaluation of project for conformity Agency: Pleven Municipality with construction requirements Procedure 14. Submit final report on Time: 14 days Agency: Construction supervision company completed construction to Burgas Cost: BGN 30 Time: 7 days Municipality Cost: BGN 8,500 (BGN 7,000 for the Agency: Burgas Municipality supervision + BGN 1,500 for the evaluation of Time: 1 day the plans) Cost: None *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 139 Procedure 3. Obtain decision from the Procedure 11*. Obtain geodetic DEALING WITH CONSTRUCTION PERMITS Regional Inspectorate of Environment measurements from a licensed company Plovdiv (Bulgaria) and Water Agency: Licensed company Agency: Regional Inspectorate of Environment Time: 14 days Warehouse value: BGN 576,682 (US$361,000) and Water - Pleven Cost: BGN 600 (Price is based on agreement Data as of: December 31, 2016 Time: 18 days with the licensed company) Cost: None Procedure 1. Obtain current cadastral Procedure 12. Map the building in extract from the Geodesy, Cartography Procedure 4*. Sign preliminary contract the cadastral map at the Geodesy, and Cadastre Agency (GCCA) in Plovdiv with the water company Cartography and Cadastre Agency Agency: Geodesy, Cartography and Cadastre Agency: Water Supply and Sewerage - Pleven (GCCA) in Pleven and receive Agency (GCCA) in Plovdiv Time: 1 day registration certificate Time: 1 day Cost: BGN 600 Agency: Geodesy, Cartography and Cadastre Cost: BGN 90 Agency (GCCA) in Pleven Procedure 5*. Obtain preliminary Time: 3 days Procedure 2. Apply for project visa assessment of the building for its Cost: BGN 124 from the Chief Architect of the Plovdiv compliance with energy efficiency Municipality requirements from licensed company Procedure 13. Obtain energy efficiency Agency: Plovdiv Municipality Agency: Licensed company certificate Time: 14 days Time: 7 days Agency: Licensed company Cost: BGN 80 Cost: BGN 2,000 (Price calculated per square Time: 7 days meter and based on agreement) Cost: BGN 1,950 Procedure 3. Sign preliminary contract with the water company Procedure 6. Sign contract with licensed Procedure 14. Submit final report on Agency: Water Supply and Sewerage - Plovdiv supervision company and obtain completed construction to Pleven Time: 1 day evaluation of project for conformity Municipality Cost: BGN 46 with construction requirements Agency: Pleven Municipality Agency: Construction supervision company Time: 1 day Procedure 4. Obtain decision from the Time: 14 days Cost: None Regional Inspectorate of Environment Cost: BGN 6,000 (BGN 4,500 for the and Water supervision + BGN 1,500 for the evaluation of Procedure 15. Register the technical Agency: Regional Inspectorate of Environment the plans) passport with the Pleven Municipality and Water - Plovdiv Agency: Pleven Municipality Time: 14 days Procedure 7. Obtain final building Time: 7 days Cost: None permit from the Chief Architect of the Cost: None Pleven Municipality Procedure 5*. Sign a contract for Agency: Pleven Municipality Procedure 16. File a copy of the constructing a water connection Time: 35 days registered technical passport at the Agency: Water Supply and Sewerage - Plovdiv Cost: BGN 260 (BGN 0.20 per square meter) Geodesy, Cartography and Cadastre Time: 7 days Agency (GCCA) in Pleven Cost: BGN 25 Procedure 8. Obtain approval for Agency: Geodesy, Cartography and Cadastre opening a construction site and Agency (GCCA) in Pleven Procedure 6*. Obtain approval from the determining construction line and Time: 1 day Regional Health Inspectorate construction level Cost: None Agency: Regional Health Inspectorate - Plovdiv Agency: Pleven Municipality Time: 11 days Time: 7 days Procedure 17. Receive final inspection Cost: BGN 65 Cost: BGN 150 by the Pleven Municipality Agency: Pleven Municipality Procedure 7*. Obtain preliminary Procedure 9. Obtain approval from Time: 1 day assessment of the building for its Pleven Municipality on the carcass Cost: None compliance with energy efficiency construction requirements from licensed company Agency: Pleven Municipality Procedure 18. Obtain certificate for the Agency: Licensed company Time: 10 days approval of use of the building from the Time: 7 days Cost: BGN 100 Pleven Municipality Cost: BGN 2,300 (Price calculated per square Agency: Pleven Municipality meter and based on agreement) Procedure 10. Sign final contract with Time: 18 days water provider and receive connection Cost: BGN 130 Agency: Water Supply and Sewerage - Pleven Time: 10 days Cost: BGN 300 *Simultaneous with previous procedure 140 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 8. Sign contract with licensed Procedure 16. Submit final report on Procedure 3. Sign preliminary contract supervision company and obtain completed construction to Plovdiv with the water company evaluation of project for conformity Municipality Agency: Water Supply and Sewerage - Ruse with construction requirements Agency: Plovdiv Municipality Time: 1 day Agency: Construction supervision company Time: 1 day Cost: BGN 60 Time: 14 days Cost: None Cost: BGN 7,875 (BGN 6,375 for the Procedure 4. Obtain permission to supervision + BGN 1,500 for the evaluation of Procedure 17. Register the technical construct and use a water connection the plans) passport with the Plovdiv Municipality Agency: Water Supply and Sewerage - Ruse Agency: Plovdiv Municipality Time: 30 days Procedure 9. Obtain investment project Time: 7 days Cost: BGN 130 approval and building permit from Cost: None Plovdiv Municipality Procedure 5*. Obtain decision from the Agency: Plovdiv Municipality Procedure 18. File a copy of the Regional Inspectorate of Environment Time: 30 days registered technical passport at the and Water Cost: BGN 2,341 Geodesy, Cartography and Cadastre Agency: Regional Inspectorate of Environment Agency (GCCA) in Plovdiv and Water - Ruse Procedure 10. Obtain approval for Agency: Geodesy, Cartography and Cadastre Time: 14 days opening a construction site and Agency (GCCA) in Plovdiv Cost: None determining construction line and Time: 1 day construction level Cost: None Procedure 6*. Obtain preliminary Agency: Plovdiv Municipality assessment of the building for its Time: 7 days Procedure 19. Receive final inspection compliance with energy efficiency Cost: BGN 20 by the Plovdiv Municipality requirements from licensed company Agency: Plovdiv Municipality Agency: Licensed company Procedure 11. Obtain approval from Time: 1 day Time: 7 days Plovdiv Municipality on the carcass Cost: None Cost: BGN 1,600 (Price calculated per square construction meter and based on agreement) Agency: Plovdiv Municipality Procedure 20. Obtain certificate for the Time: 10 days approval of use of the building from the Procedure 7. Sign contract with licensed Cost: BGN 100 Plovdiv Municipality supervision company and obtain Agency: Plovdiv Municipality evaluation of project for conformity Procedure 12. Sign final contract with Time: 21 days with construction requirements water provider and receive connection Cost: BGN 750 Agency: Construction supervision company Agency: Water Supply and Sewerage - Plovdiv Time: 9 days Time: 30 days DEALING WITH CONSTRUCTION PERMITS Cost: BGN 4,750 (BGN 3,250 for the Cost: BGN 108 Ruse (Bulgaria) supervision + BGN 1,500 for the evaluation of the plans) Warehouse value: BGN 576,682 (US$361,000) Procedure 13*. Obtain geodetic Data as of: December 31, 2016 Procedure 8. Obtain final building measurements from a licensed company Agency: Licensed company permit from the Chief Architect of the Time: 7 days Procedure 1. Obtain current cadastral Ruse Municipality extract from the Geodesy, Cartography Agency: Ruse Municipality Cost: BGN 600 (Price is based on agreement with the licensed company) and Cadastre Agency (GCCA) in Ruse Time: 21 days Agency: Geodesy, Cartography and Cadastre Cost: BGN 670 (BGN 0.4 per square meter for Agency (GCCA) in Ruse investment project approval and BGN 150 for Procedure 14. Map the building in Time: 1 day building permit) the cadastral map at the Geodesy, Cost: BGN 90 Cartography and Cadastre Agency (GCCA) in Plovdiv and receive Procedure 9. Obtain approval for registration certificate Procedure 2. Apply for project visa opening a construction site and Agency: Geodesy, Cartography and Cadastre from the Chief Architect of the Ruse determining construction line and Agency (GCCA) in Plovdiv Municipality construction level Time: 3 days Agency: Ruse Municipality Agency: Ruse Municipality Cost: BGN 124 Time: 14 days Time: 3 days Cost: BGN 50 Cost: BGN 20 Procedure 15. Obtain energy efficiency certificate Agency: Licensed company Time: 7 days Cost: BGN 1,950 *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 141 Procedure 10. Obtain approval from Procedure 18. Obtain certificate for the Procedure 7. Obtain investment project Ruse Municipality on the carcass approval of use of the building from the approval and building permit from Sofia construction Ruse Municipality Municipality Agency: Ruse Municipality Agency: Ruse Municipality Agency: Sofia Municipality Time: 30 days Time: 7 days Time: 35 days Cost: BGN 100 Cost: BGN 750 Cost: BGN 10,405 (BGN 8 per square meter for building permit) DEALING WITH CONSTRUCTION PERMITS Procedure 11*. Obtain geodetic measurements from a licensed company Sofia (Bulgaria) Procedure 8. Obtain approval for Agency: Licensed company opening a construction site and Warehouse value: BGN 576,682 (US$361,000) Time: 7 days determining construction line and Data as of: December 31, 2016 Cost: BGN 438 (Price is based on agreement construction level with the licensed company) Agency: Sofia Municipality Procedure 1. Obtain current cadastral Time: 2 days extract from the Geodesy, Cartography Procedure 12. Sign final contract with Cost: BGN 20 and Cadastre Agency (GCCA) in Sofia water provider and receive connection Agency: Geodesy, Cartography and Cadastre Agency: Water Supply and Sewerage - Ruse Agency (GCCA) in Sofia Procedure 9. Obtain approval from Sofia Time: 30 days Time: 1 day Municipality on the carcass construction Cost: BGN 600 Cost: BGN 90 Agency: Sofia Municipality Time: 4 days Procedure 13. Map the building in Cost: BGN 1,500 Procedure 2. Apply for project visa the cadastral map at the Geodesy, from the Chief Architect of the Sofia Cartography and Cadastre Agency Municipality Procedure 10. Sign final contract with (GCCA) in Ruse and receive registration Agency: Sofia Municipality water company and receive connection certificate Time: 3 days Agency: Sofiyska Voda Agency: Geodesy, Cartography and Cadastre Cost: BGN 80 Time: 7 days Agency (GCCA) in Ruse Cost: BGN 600 Time: 3 days Procedure 3. Obtain decision from the Cost: BGN 124 Procedure 11*. Obtain geodetic Regional Inspectorate of Environment and Water measurements from a licensed company Procedure 14. Obtain energy efficiency Agency: Regional Inspectorate of Environment Agency: Licensed company certificate and Water Time: 7 days Agency: Licensed company Time: 14 days Cost: BGN 350 (Price is based on agreement Time: 7 days Cost: None with the licensed company) Cost: BGN 1,300 Procedure 4*. Sign preliminary contract Procedure 12. Map the building in Procedure 15. Submit final report with the water company the cadastral map at the Geodesy, on completed construction to Ruse Agency: Sofiyska Voda Cartography and Cadastre Agency Municipality Time: 7 days (GCCA) in Sofia and receive registration Agency: Ruse Municipality Cost: BGN 600 certificate Time: 1 day Agency: Geodesy, Cartography and Cadastre Cost: None Agency (GCCA) in Sofia Procedure 5*. Obtain preliminary Time: 3 days assessment of the building for its Procedure 16. Register the technical Cost: BGN 124 compliance with energy efficiency passport with the Ruse Municipality requirements from licensed company Agency: Ruse Municipality Agency: Licensed company Procedure 13. Obtain energy efficiency Time: 7 days Time: 5 days certificate Cost: None Agency: Licensed company Cost: BGN 2,601 (BGN 2 per square meter) Time: 7 days Procedure 17. File a copy of the Cost: BGN 500 Procedure 6. Sign contract with licensed registered technical passport at the supervision company and obtain Geodesy, Cartography and Cadastre evaluation of project for conformity Procedure 14. Submit final report Agency (GCCA) in Ruse with construction requirements on completed construction to Sofia Agency: Geodesy, Cartography and Cadastre Agency: Construction supervision company Municipality Agency (GCCA) in Ruse Agency: Sofia Municipality Time: 7 days Time: 1 day Time: 1 day Cost: BGN 9,150 (BGN 7,150 for the supervision Cost: None + BGN 2,000 for the evaluation of the plans) Cost: None *Simultaneous with previous procedure 142 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 15. Register the technical Procedure 4*. Sign preliminary contract Procedure 12*. Obtain geodetic passport with the Sofia Municipality with the water company measurements from a licensed company Agency: Sofia Municipality Agency: Water Supply and Sewerage - Varna Agency: Licensed company Time: 3 days Time: 1 day Time: 7 days Cost: None Cost: BGN 300 Cost: BGN 350 (Price is based on agreement with the licensed company) Procedure 16. File a copy of the Procedure 5*. Obtain preliminary registered technical passport at the assessment of the building for its Procedure 13. Map the building in Geodesy, Cartography and Cadastre compliance with energy efficiency the cadastral map at the Geodesy, Agency (GCCA) in Sofia requirements from licensed company Cartography and Cadastre Agency Agency: Geodesy, Cartography and Cadastre Agency: Licensed company (GCCA) in Varna and receive registration Agency (GCCA) in Sofia Time: 7 days certificate Time: 1 day Cost: BGN 2,800 (Price calculated per square Agency: Geodesy, Cartography and Cadastre Cost: None meter and based on agreement) Agency (GCCA) in Varna Time: 3 days Cost: BGN 124 Procedure 17. Receive final inspection Procedure 6*. Obtain approval from the by the Sofia Municipality Regional Health Inspectorate Agency: Sofia Municipality Agency: Regional Health Inspectorate - Varna Procedure 14. Obtain energy efficiency Time: 1 day Time: 11 days certificate Cost: None Cost: BGN 70 Agency: Licensed company Time: 7 days Cost: BGN 2,600 Procedure 18. Obtain certificate for the Procedure 7. Sign contract with licensed approval of use of the building from the supervision company and obtain Sofia Municipality evaluation of project for conformity Procedure 15. Submit final report on Agency: Sofia Municipality with construction requirements completed construction to Varna Time: 7 days Agency: Construction supervision company Municipality Cost: BGN 750 Time: 7 days Agency: Varna Municipality Cost: BGN 8,650 (BGN 7,150 for the Time: 1 day DEALING WITH CONSTRUCTION PERMITS supervision + BGN 1,500 for the evaluation of Cost: None the plans) Varna (Bulgaria) Procedure 16. Register the technical Warehouse value: BGN 576,682 (US$361,000) Procedure 8. Obtain final building passport with the Varna Municipality Data as of: December 31, 2016 permit from the Chief Architect of the Agency: Varna Municipality Varna Municipality Time: 3 days Procedure 1. Obtain current cadastral Agency: Varna Municipality Cost: None extract from the Geodesy, Cartography Time: 36 days and Cadastre Agency (GCCA) in Varna Cost: BGN 3,612 (BGN 2.70 per square meter + Procedure 17. File a copy of the Agency: Geodesy, Cartography and Cadastre BGN 100 flat fee) registered technical passport at the Agency (GCCA) in Varna Geodesy, Cartography and Cadastre Time: 1 day Procedure 9. Obtain approval for Agency (GCCA) in Varna Cost: BGN 90 opening a construction site and Agency: Geodesy, Cartography and Cadastre determining construction line and Agency (GCCA) in Varna Procedure 2. Apply for project visa construction level Time: 1 day from the Chief Architect of the Varna Agency: Varna Municipality Cost: None Municipality Time: 7 days Agency: Varna Municipality Cost: BGN 20 Procedure 18. Receive final inspection Time: 14 days by the Varna Municipality Cost: BGN 30 Procedure 10. Obtain approval from Agency: Varna Municipality Varna Municipality on the carcass Time: 1 day Procedure 3. Obtain decision from the construction Cost: None Regional Inspectorate of Environment Agency: Varna Municipality and Water Time: 10 days Procedure 19. Obtain certificate for the Agency: Regional Inspectorate of Environment Cost: BGN 100 approval of use of the building from the and Water - Varna Varna Municipality Time: 14 days Procedure 11. Sign final contract with Agency: Varna Municipality Cost: None water provider and receive connection Time: 20 days Agency: Water Supply and Sewerage - Varna Cost: BGN 700 Time: 10 days Source: Doing Business database. Cost: BGN 300 Note: Additional information on each procedure can be found at www.doingbusiness.org/EU1. *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 143 DEALING WITH CONSTRUCTION PERMITS Procedure 8. Request and obtain Procedure 15. Obtain approval on the building permit cleanliness of water HUNGARY Agency: Building Department, Mayor’s Office Agency: Accredited laboratory of the District Municipality Time: 10 days Budapest (Hungary) Time: 45 days Cost: HUF 29,000 Warehouse value: HUF 164,816,344 (US$649,500) Cost: HUF 113,700 [HUF 100,000 (fee for Data as of: December 31, 2016 construction permit over 250 sq. m.) + HUF Procedure 16*. Submit new geodetic 5,000 (standard fee) + HUF 8,700 (fee for map Procedure 1. Request and obtain site review of documentation by Public Health Agency: Department of Land Administration map and site ownership certificate from Unit)] (Foldhivatal) the Department of Land Administration Time: 10 days (Foldhivatal) Procedure 9. Receive on-site inspection Cost: HUF 800 Agency: Department of Land Administration from the Building Department (Foldhivatal) Agency: Building Department, Mayor’s Office of the District Municipality Procedure 17. Receive final inspection Time: 1 day Time: 1 day from Fire Protection Unit Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Cost: None Agency: Fire Protection Unit, District Disaster 6,250 (site ownership certificate)] Management Branch, Capital City Disaster Management Directorate Procedure 2. Request and obtain urban Procedure 10. Set up e-construction log Time: 1 day planning approval Agency: Lechner Nonprofit Ltd. Cost: None Agency: Unit of the Chief Architect, Mayor’s Time: Less than one day (online procedure) Office of the District Municipality Cost: HUF 7,000 Procedure 18*. Receive final inspection Time: 30 days from the Public Health Department Cost: None Procedure 11. Receive unscheduled Agency: Public Health Unit, District Office, inspection from the Building and Budapest Capital City Government Office Procedure 3*. Obtain geo-technical Heritage Protection Unit Time: 1 day report Agency: Building and Heritage Protection Unit, Cost: None Agency: Licensed company Office of District I or V, Budapest Capital City Time: 14 days Government Office Procedure 19*. Receive final inspection Cost: HUF 100,000 Time: 1 day from the Building Department Cost: None Agency: Building Department, Mayor’s Office Procedure 4*. Request and obtain utility of the District Municipality statement from Budapest Waterworks Procedure 12. Request and obtain water Time: 1 day Ltd. connection from Budapest Waterworks Cost: None Agency: Budapest Waterworks Ltd. Ltd. Time: 1 day Agency: Budapest Waterworks Ltd. Procedure 20. Obtain occupancy permit Cost: None Time: 10 days and update site ownership certificate Cost: HUF 361,100 [HUF 100,000 (fee for Agency: Building Department, Mayor’s Office water connection) + HUF 373,000 per m3/ Procedure 5. Request and obtain utility of the District Municipality, and Department of day (fee for water utility public development permission document from Budapest Land Administration (Foldhivatal) contribution)] Waterworks Ltd. Time: 51 days Agency: Budapest Waterworks Ltd. Cost: HUF 120,300 [HUF 100,000 (fee for Procedure 13. Request and obtain occupancy permit over 250 sq. m.) + HUF Time: 30 days sewerage connection from Budapest 5,000 (standard fee) + HUF 8,700 (fee for Cost: None Sewage Works Ltd. review of documentation by Public Health Agency: Budapest Sewage Works Ltd. Unit) + HUF 6,600 (fee for modification of Procedure 6*. Request and obtain Time: 21 days the site map and the site ownership certificate authorization on the fire protection Cost: HUF 363,659 [HUF 539,000 per m3/ by the Department of Land Administration system day (fee for sewage utility public development (Foldhivatal))] Agency: Fire Protection Unit, District Disaster contribution) + HUF 40,259 (on-site inspection Management Branch, Capital City Disaster on the sewerage connection)] Management Directorate Time: 30 days Procedure 14*. Close e-construction log Cost: HUF 3,000 Agency: Building and Heritage Protection Unit, Office of District I or V, Budapest Capital City Procedure 7*. Request and obtain utility Government Office permission document from Budapest Time: Less than one day (online procedure) Sewage Works Ltd. Cost: None Agency: Budapest Sewage Works Ltd. Time: 15 days Cost: None *Simultaneous with previous procedure 144 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA DEALING WITH CONSTRUCTION PERMITS for review of documentation by the Public Procedure 15. Receive final inspection Health Unit) + HUF 14,000 (fee for review from Fire Protection Unit Debrecen (Hungary) of documentation by the Environment and Agency: Fire Protection Unit, Debrecen Disaster Warehouse value: HUF 164,816,344 (US$649,500) Conservation Department)] Management Branch, Disaster Management Data as of: December 31, 2016 Directorate of Hajdú-Bihar County Procedure 8. Receive on-site inspection Time: 1 day Procedure 1. Request and obtain site from the Technical Unit Cost: None map and site ownership certificate from Agency: Technical Unit, City Development the Land Administration Department Department, Mayor’s Office of Debrecen Procedure 16*. Receive final inspection (Foldhivatal) Time: 1 day from the Public Health Unit Agency: Land Administration Department Cost: None Agency: Public Health Unit, Debrecen District (Foldhivatal), Debrecen District Office, Office, Hajdú-Bihar County Government Office Csongrád County Government Office Procedure 9. Set up e-construction log Time: 1 day Time: 1 day Agency: Lechner Nonprofit Ltd. Cost: None Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Time: Less than one day (online procedure) 6,250 (site ownership certificate)] Cost: HUF 7,000 Procedure 17*. Receive final inspection from the Technical Department Procedure 2. Request and obtain urban Procedure 10. Receive unscheduled Agency: Technical Unit, City Development planning approval inspection from the Building and Department, Mayor’s Office of Debrecen Agency: Unit of the Chief Architect, Mayor’s Heritage Protection Unit Time: 1 day Office of Debrecen Agency: Building and Heritage Protection Unit, Cost: None Time: 18 days Debrecen District Office, Hajdú-Bihar County Cost: None Government Office Procedure 18. Obtain occupancy permit Time: 1 day and update site ownership certificate Procedure 3*. Obtain geo-technical Cost: None Agency: Technical Unit, City Development report Department, Mayor’s Office of Debrecen, and Agency: Licensed company Procedure 11. Request and obtain Land Registry Department, Debrecen District Time: 14 days water and sewerage connection from Office, Csongrád County Government Office Cost: HUF 120,000 Debrecen Waterworks Ltd. Time: 47 days Agency: Debrecen Waterworks Ltd. Cost: HUF 120,300 [HUF 100,000 (fee for Procedure 4*. Request and obtain utility Time: 15 days occupancy permit over 250 sq. m.) + HUF 5,000 (standard fee) + HUF 8,700 (fee for statement from Debrecen Waterworks Cost: HUF 205,600 [HUF 142,000 (fee for water connection) + HUF 42,000 per m3/ review of documentation by Public Health Unit) Ltd. day (fee for water utility public development + HUF 6,600 (fee for modification of the site Agency: Debrecen Waterworks Ltd. map and the site ownership certificate by the Time: 3 days contribution) + HUF 57,000 per m3/day (fee for sewage utility public development Land Registry)] Cost: HUF 4,724 contribution)] DEALING WITH CONSTRUCTION PERMITS Procedure 5. Request and obtain utility Gyor (Hungary) Procedure 12*. Close e-construction log permission document from Debrecen Agency: Building and Heritage Protection Unit, Waterworks Ltd. Debrecen District Office, Hajdú-Bihar County Warehouse value: HUF 164,816,344 (US$649,500) Agency: Debrecen Waterworks Ltd. Data as of: December 31, 2016 Government Office Time: 30 days Time: Less than one day (online procedure) Cost: None Cost: None Procedure 1. Request and obtain site map and site ownership certificate from Procedure 6*. Request and obtain the Land Administration Department Procedure 13. Submit new geodetic map authorization on the fire protection (Foldhivatal) Agency: Land Administration Department system Agency: Land Administration Department (Foldhivatal), Debrecen District Office, Agency: Fire Protection Unit, Debrecen Disaster (Foldhivatal), Győr District Office, Győr- Csongrád County Government Office Management Branch, Disaster Management Moson-Sopron County Government Office Time: 10 days Directorate of Hajdú-Bihar County Time: 1 day Cost: HUF 800 Time: 15 days Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Cost: HUF 3,000 6,250 (site ownership certificate)] Procedure 14*. Obtain approval on the cleanliness of water Procedure 2. Obtain geo-technical report Procedure 7. Request and obtain Agency: Accredited laboratory building permit Agency: Licensed company Time: 7 days Agency: Technical Unit, City Development Time: 18 days Cost: HUF 22,000 Department, Mayor’s Office of Debrecen Cost: HUF 102,000 Time: 45 days Cost: HUF 127,700 [HUF 100,000 (fee for construction permit over 250 sq. m.) + HUF 5,000 (standard fee) + HUF 8,700 (fee *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 145 Procedure 3*. Request and obtain urban Procedure 11. Request and obtain Procedure 18. Obtain occupancy permit planning approval water and sewerage connection from and update site ownership certificate Agency: Unit of the Chief Architect, Mayor’s Pannon-Water Ltd. Agency: Building Unit, Mayor’s Office of Office of Győr Agency: Pannon-Water Ltd. Győr, and Land Registry Department, Győr Time: 14 days Time: 10 days District Office, Győr-Moson-Sopron County Cost: None Cost: HUF 325,000 [HUF 100,000 (fee for Government Office water connection) + HUF 150,000 per m3/ Time: 50 days Procedure 4*. Request and obtain utility day (fee for water utility public development Cost: HUF 120,300 [HUF 100,000 (fee for contribution) + HUF 200,000 per m3/day occupancy permit over 250 sq. m.) + HUF statement from the Pannon-Water Ltd. (fee for sewage utility public development 5,000 (standard fee) + HUF 8,700 (fee for Agency: Pannon-Water Ltd. contribution)] review of documentation by Public Health Unit) Time: 1 day + HUF 6,600 (fee for modification of the site Cost: HUF 7,638 Procedure 12*. Close e-construction log map and the site ownership certificate by the Agency: Building and Heritage Protection Unit, Land Registry)] Procedure 5. Request and obtain Győr District Office, Győr-Moson-Sopron authorization on the fire protection County Government Office DEALING WITH CONSTRUCTION PERMITS system Time: Less than one day (online procedure) Miskolc (Hungary) Agency: Fire Protection Unit, Győr Disaster Cost: None Management Branch, Disaster Management Warehouse value: HUF 164,816,344 (US$649,500) Directorate of Győr-Moson-Sopron County Data as of: December 31, 2016 Procedure 13. Obtain approval on the Time: 21 days cleanliness of water Cost: HUF 3,000 Agency: Accredited laboratory Procedure 1. Request and obtain site map and site ownership certificate from Time: 11 days Procedure 6*. Request and obtain utility the Land Administration Department Cost: HUF 21,873 permission document from Pannon- (Foldhivatal) Water Ltd. Agency: Land Administration Department Procedure 14*. Submit new geodetic (Foldhivatal), Miskolc District Office, Borsod- Agency: Pannon-Water Ltd. map Abaúj-Zemplén County Government Office Time: 20 days Agency: Land Administration Department Time: 1 day Cost: None (Foldhivatal), Győr District Office, Győr- Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Moson-Sopron County Government Office 6,250 (site ownership certificate)] Procedure 7. Request and obtain Time: 10 days building permit Cost: HUF 800 Agency: Building Unit, Mayor’s Office of Győr Procedure 2. Request and obtain urban Time: 45 days planning approval Procedure 15. Receive final inspection Agency: City Building Unit, Mayor’s Office of Cost: HUF 127,700 [HUF 100,000 (fee for from Fire Protection Unit Miskolc construction permit over 250 sq. m.) + HUF Agency: Fire Protection Unit, Győr Disaster Time: 14 days 5,000 (standard fee) + HUF 8,700 (fee Management Branch, Disaster Management Cost: None for review of documentation by the Public Directorate of Győr-Moson-Sopron County Health Unit) + HUF 14,000 (fee for review of documentation by the Environment and Time: 1 day Procedure 3*. Obtain geo-technical Conservation Unit)] Cost: None report Agency: Licensed company Procedure 8. Receive on-site inspection Procedure 16*. Receive final inspection Time: 14 days from the Building Unit from the Public Health Unit Cost: HUF 150,000 Agency: Building Unit, Mayor’s Office of Győr Agency: Public Health Unit, Győr District Time: 1 day Office, Győr-Moson-Sopron County Cost: None Government Office Procedure 4*. Request and obtain utility Time: 1 day statement from the MIVÍZ Miskolc Procedure 9. Set up e-construction log Cost: None Waterworks Ltd. Agency: Lechner Nonprofit Ltd. Agency: MIVÍZ Miskolc Waterworks Ltd. Time: Less than one day (online procedure) Procedure 17*. Receive final inspection Time: 1 day Cost: HUF 7,000 from the Building Unit Cost: HUF 5,000 Agency: Building Unit, Mayor’s Office of Győr Procedure 10. Receive unscheduled Time: 1 day Procedure 5. Request and obtain utility inspection from the Building and Cost: None permission document from MIVÍZ Heritage Protection Unit Miskolc Waterworks Ltd. Agency: Building and Heritage Protection Unit, Agency: MIVÍZ Miskolc Waterworks Ltd. Győr District Office, Győr-Moson-Sopron Time: 24 days County Government Office Cost: None Time: 1 day Cost: None *Simultaneous with previous procedure 146 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 6*. Request and obtain Procedure 12*. Close e-construction log DEALING WITH CONSTRUCTION PERMITS authorization on the fire protection Agency: Building and Heritage Protection Unit, Pecs (Hungary) system Miskolc District Office, Borsod-Abaúj-Zemplén Agency: Fire Protection Unit, Miskolc Disaster County Government Office Warehouse value: HUF 164,816,344 (US$649,500) Management Branch, Disaster Management Time: Less than one day (online procedure) Data as of: December 31, 2016 Directorate of Borsod-Abaúj-Zemplén County Cost: None Time: 15 days Procedure 1. Request and obtain site Cost: HUF 3,000 Procedure 13. Submit new geodetic map map and site ownership certificate from Agency: Land Administration Department the Land Administration Department Procedure 7. Request and obtain (Foldhivatal), Miskolc District Office, Borsod- (Foldhivatal) building permit Abaúj-Zemplén County Government Office Agency: Land Administration Department Agency: Building Unit, Building and Time: 10 days (Foldhivatal), Pécs District Office, Baranya Environment Protection Department, Mayor’s Cost: HUF 800 County Government Office Office of Miskolc Time: 1 day Time: 45 days Procedure 14*. Obtain approval on the Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Cost: HUF 127,700 [HUF 100,000 (fee for cleanliness of water 6,250 (site ownership certificate)] construction permit over 250 sq. m.) + HUF Agency: Accredited laboratory 5,000 (standard fee) + HUF 8,700 (fee Procedure 2. Obtain geo-technical report Time: 7 days for review of documentation by the Public Agency: Licensed company Cost: HUF 7,000 Health Service) + HUF 14,000 (fee for review Time: 14 days of documentation by the Environment and Procedure 15. Receive final inspection Cost: HUF 160,000 Conservation Unit)] from Fire Protection Unit Procedure 8. Receive on-site inspection Agency: Fire Protection Unit, Miskolc Disaster Procedure 3*. Request and obtain utility from the Building and Environment Management Branch, Disaster Management statement from the Tettye Watersource Protection Unit Directorate of Borsod-Abaúj-Zemplén County Ltd. Time: 1 day Agency: Tettye Watersource Ltd. Agency: Building and Environment Protection Unit, Mayor’s Office of Miskolc Cost: None Time: 7 days Time: 1 day Cost: HUF 10,400 Cost: None Procedure 16*. Receive final inspection from the Public Health Service Procedure 4. Request and obtain utility Procedure 9. Set up e-construction log Agency: Public Health Service, Miskolc statement from the Tettye Watersource District Office, Borsod-Abaúj-Zemplén County Ltd. Agency: Lechner Nonprofit Ltd. Government Office Agency: Tettye Watersource Ltd. Time: Less than one day (online procedure) Time: 1 day Time: 30 days Cost: HUF 7,000 Cost: None Cost: None Procedure 10. Receive unscheduled Procedure 17*. Receive final inspection Procedure 5*. Request and obtain inspection from the Building and from the Building and Environment authorization on the fire protection Heritage Protection Unit Protection Unit system Agency: Building and Heritage Protection Unit, Agency: Building Unit, Building and Agency: Fire Protection Unit, Pécs Disaster Miskolc District Office, Borsod-Abaúj-Zemplén Environment Protection Department, Mayor’s Management Branch, Disaster Management County Government Office Office of Miskolc Directorate of Baranya County Time: 1 day Time: 1 day Time: 14 days Cost: None Cost: None Cost: HUF 3,000 Procedure 11. Request and obtain water Procedure 18. Obtain occupancy permit Procedure 6. Request and obtain and sewerage connection from MIVÍZ and update site ownership certificate building permit Miskolc Waterworks Ltd. Agency: Building Unit, Building and Agency: Technical Unit, Mayor’s Office of Pécs Agency: MIVÍZ Miskolc Waterworks Ltd. Environment Protection Department, Time: 30 days Time: 14 days Mayor’s Office of Miskolc, and Land Registry Cost: HUF 113,700 [HUF 100,000 (fee for Cost: HUF 425,000 [HUF 200,000 (fee for Department, Miskolc District Office, Borsod- construction permit over 250 sq. m.) + HUF water connection) + HUF 150,000 per m3/ Abaúj-Zemplén County Government Office 5,000 (standard fee) + HUF 8,700 (fee for day (fee for water utility public development Time: 44 days review of documentation by the Public Health contribution) + HUF 200,000 per m3/day Cost: HUF 120,300 [HUF 100,000 (fee for Unit)] (fee for sewage utility public development occupancy permit over 250 sq. m.) + HUF contribution)] 5,000 (standard fee) + HUF 8,700 (fee for Procedure 7. Receive on-site inspection review of documentation by Public Health Unit) from the Technical Unit + HUF 6,600 (fee for modification of the site Agency: Technical Unit, Mayor’s Office of Pécs map and the site ownership certificate by the Time: 1 day Land Registry)] Cost: None *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 147 Procedure 8. Set up e-construction log Procedure 16*. Receive final inspection Procedure 5. Request and obtain utility Agency: Lechner Nonprofit Ltd. from the Technical Unit statement from the Szeged Waterworks Time: Less than one day (online procedure) Agency: Technical Unit, Mayor’s Office of Pécs Ltd. Cost: HUF 7,000 Time: 1 day Agency: Szeged Waterworks Ltd. Cost: None Time: 21 days Procedure 9. Receive unscheduled Cost: None inspection from the Building and Procedure 17. Obtain occupancy permit Heritage Protection Unit and update site ownership certificate Procedure 6*. Request and obtain Agency: Building and Heritage Protection Agency: Technical Unit, Mayor’s Office of Pécs, authorization on the fire protection Unit, Pécs District Office, Baranya County and Land Registry Department, Pécs District system Government Office Office, Baranya County Government Office Agency: Fire Protection Unit, Szeged Disaster Time: 1 day Time: 35 days Management Branch, Disaster Management Cost: None Cost: HUF 120,300 [HUF 100,000 (fee for Directorate of Csongrád County occupancy permit over 250 sq. m.) + HUF Time: 14 days Procedure 10. Request and obtain water 5,000 (standard fee) + HUF 8,700 (fee for Cost: HUF 3,000 and sewerage connection from Tettye review of documentation by Public Health Unit) Watersource Ltd. + HUF 6,600 (fee for modification of the site map and the site ownership certificate by the Procedure 7. Request and obtain Agency: Tettye Watersource Ltd. Land Registry)] building permit Time: 15 days Agency: Building Unit, Managerial and Building Cost: HUF 282,200 [HUF 125,000 (fee for Department, Mayor’s Office of Szeged water connection) + HUF 102,000 per m3/ DEALING WITH CONSTRUCTION PERMITS Time: 38 days day (fee for water utility public development Szeged (Hungary) Cost: HUF 127,700 [HUF 100,000 (fee for contribution) + HUF 143,000 per m3/day Warehouse value: HUF 164,816,344 (US$649,500) construction permit over 250 sq. m.) + HUF (fee for sewage utility public development Data as of: December 31, 2016 5,000 (standard fee) + HUF 8,700 (fee contribution)] for review of documentation by the Public Health Unit) + HUF 14,000 (fee for review Procedure 11*. Close e-construction log Procedure 1. Request and obtain site of documentation by the Environment and Agency: Building and Heritage Protection map and site ownership certificate from Conservation Unit)] Unit, Pécs District Office, Baranya County the Land Administration Department Government Office (Foldhivatal) Time: Less than one day (online procedure) Procedure 8. Receive on-site inspection Agency: Land Administration Department from the Building Unit Cost: None (Foldhivatal), Szeged District Office, Csongrád Agency: Building Unit, Managerial and Building County Government Office Department, Mayor’s Office of Szeged Procedure 12. Obtain approval on the Time: 1 day Time: 1 day cleanliness of water Cost: HUF 9,250 [HUF 3,000 (site map) + HUF Cost: None Agency: Accredited laboratory 6,250 (site ownership certificate)] Time: 14 days Procedure 9. Set up e-construction log Cost: HUF 20,000 Procedure 2. Request and obtain urban Agency: Lechner Nonprofit Ltd. planning approval Time: Less than one day (online procedure) Procedure 13*. Submit new geodetic Agency: City Planning/Head Architect’s Unit, Cost: HUF 7,000 map Development Department, Mayor’s Office of Agency: Land Administration Department Szeged (Foldhivatal), Pécs District Office, Baranya Time: 14 days Procedure 10. Receive unscheduled County Government Office Cost: None inspection from the Building and Time: 10 days Heritage Protection Unit Cost: HUF 800 Procedure 3*. Obtain geo-technical Agency: Building and Heritage Protection report Unit, Szeged District Office, Csongrád County Government Office Procedure 14. Receive final inspection Agency: Licensed company Time: 1 day from Fire Protection Unit Time: 14 days Cost: None Agency: Fire Protection Unit, Pécs Disaster Cost: HUF 150,000 Management Branch, Disaster Management Directorate of Baranya County Procedure 11. Request and obtain water Procedure 4*. Request and obtain utility Time: 1 day and sewerage connection from Szeged statement from the Szeged Waterworks Cost: None Waterworks Ltd. Ltd. Agency: Szeged Waterworks Ltd. Agency: Szeged Waterworks Ltd. Time: 9 days Procedure 15*. Receive final inspection Time: 1 day Cost: HUF 268,800 [HUF 110,000 (fee for from the Public Health Unit Cost: HUF 824 water connection) + HUF 106,000 per m3/ Agency: Public Health Unit, Pécs District Office, day (fee for water utility public development Baranya County Government Office contribution) + HUF 141,000 per m3/day Time: 1 day (fee for sewage utility public development Cost: None contribution)] *Simultaneous with previous procedure 148 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 12*. Close e-construction log DEALING WITH CONSTRUCTION PERMITS Procedure 8. Receive on-site inspection Agency: Building and Heritage Protection Szekesfehervar (Hungary) from Building Management Unit Unit, Szeged District Office, Csongrád County Agency: Building Management Unit, Mayor’s Government Office Warehouse value: HUF 164,816,344 (US$649,500) Office of Székesfehérvár Time: Less than one day (online procedure) Data as of: December 31, 2016 Time: 1 day Cost: None Cost: None Procedure 1. Request and obtain site Procedure 13. Obtain approval on the map and site ownership certificate from Procedure 9. Set up e-construction log cleanliness of water the Land Administration Department Agency: Lechner Nonprofit Ltd. Agency: Accredited laboratory (Foldhivatal) Time: Less than one day (online procedure) Time: 12 days Agency: Land Administration Department Cost: HUF 7,000 (Foldhivatal), Székesfehérvár District Office, Cost: HUF 15,000 Fejér County Government Office Time: 1 day Procedure 10. Receive unscheduled Procedure 14*. Submit new geodetic Cost: HUF 9,250 [HUF 3,000 (site map) + HUF inspection from the Building and map 6,250 (site ownership certificate)] Heritage Protection Unit Agency: Land Administration Department Agency: Building and Heritage Protection Unit, (Foldhivatal), Szeged District Office, Csongrád Procedure 2. Obtain geo-technical report Székesfehérvár District Office, Fejér County County Government Office Government Office Agency: Licensed company Time: 10 days Time: 1 day Time: 14 days Cost: HUF 800 Cost: None Cost: HUF 200,000 Procedure 15. Receive final inspection Procedure 3*. Request and obtain urban Procedure 11. Request and obtain water from Fire Protection Unit planning approval and sewerage connection from Fejérvíz Agency: Fire Protection Unit, Szeged Disaster Agency: Unit of the Chief Architect, Mayor’s Water Ltd. Management Branch, Disaster Management Office of Székesfehérvár Agency: Fejérvíz Water Ltd. Directorate of Csongrád County Time: 8 days Time: 10 days Time: 1 day Cost: None Cost: HUF 364,000 [HUF 100,000 (fee for Cost: None water connection) + HUF 180,000 per m3/ Procedure 4*. Request and obtain utility day (fee for water utility public development Procedure 16*. Receive final inspection contribution)+ HUF 230,000 per m3/day statement from the Fejérvíz Water Ltd. from the Public Health Unit (fee for sewage utility public development Agency: Fejérvíz Water Ltd. contribution)] Agency: Public Health Unit, Szeged District Time: 1 day Office, Csongrád County Government Office Cost: None Time: 1 day Procedure 12*. Close e-construction log Cost: None Agency: Building and Heritage Protection Unit, Procedure 5. Request and obtain utility Székesfehérvár District Office, Fejér County statement from the Fejérvíz Water Ltd. Government Office Procedure 17*. Receive final inspection Agency: Fejérvíz Water Ltd. Time: Less than one day (online procedure) from the Building Unit Time: 27 days Cost: None Agency: Building Unit, Managerial and Building Cost: None Department, Mayor’s Office of Szeged Time: 1 day Procedure 13. Submit new geodetic map Cost: None Procedure 6*. Request and obtain Agency: Land Administration Department authorization on the fire protection (Foldhivatal), Székesfehérvár District Office, system Fejér County Government Office Procedure 18. Obtain occupancy permit Agency: Fire Protection Unit, Székesfehérvár Time: 10 days and update site ownership certificate Disaster Management Branch, Disaster Cost: HUF 800 Agency: Building Unit, Managerial and Building Management Directorate of Fejér County Department, Mayor’s Office of Szeged Time: 21 days Procedure 14*. Obtain approval on the Time: 46 days Cost: HUF 3,000 cleanliness of water Cost: HUF 120,300 [HUF 100,000 (fee for occupancy permit over 250 sq. m.) + HUF Agency: Accredited laboratory 5,000 (standard fee) + HUF 8,700 (fee for Procedure 7. Request and obtain Time: 5 days review of documentation by Public Health Unit) building permit Cost: HUF 10,000 + HUF 6,600 (fee for modification of the site Agency: Building Management Unit, Mayor’s map and the site ownership certificate by the Office of Székesfehérvár Procedure 15. Receive final inspection Land Registry)] Time: 45 days from Fire Protection Unit Cost: HUF 127,700 [HUF 100,000 (fee for Agency: Fire Protection Unit, Székesfehérvár construction permit over 250 sq. m.) + HUF Disaster Management Branch, Disaster 5,000 (standard fee) + HUF 8,700 (fee Management Directorate of Fejér County for review of documentation by the Public Time: 1 day Health Unit) + HUF 14,000 (fee for review of documentation by the Environment and Cost: None Conservation Unit)] *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 149 Procedure 16*. Receive final inspection Procedure 3. Obtain urban planning Procedure 11*. Register project with from the Public Health Unit certificate Order of Architects and pay architecture Agency: Public Health Unit, Székesfehérvár Agency: Department of Urbanism of the Brasov stamp duty District Office, Fejér County Government Office City Hall Agency: Order of Architects Time: 1 day Time: 40 days Time: 2 days Cost: None Cost: RON 14 Cost: RON 928 (RON 50 plus 0.05% of the value of construction) Procedure 17*. Receive final inspection Procedure 4. Obtain project clearance from Building Management Unit from Circulation Committee Procedure 12*. Obtain updated land Agency: Building Management Unit, Mayor’s Agency: City Hall registry excerpt from National Agency Office of Székesfehérvár Time: 30 days for Cadastre and Land Registration Time: 1 day Cost: None (NACLR) Cost: None Agency: Brasov County Office of National Procedure 5*. Obtain project clearance Agency for Cadastre and Land Registration Procedure 18. Obtain occupancy permit (NACLR) from water supply and sewerage and update site ownership certificate Time: 3 days authority Agency: Building Management Unit, Mayor’s Cost: RON 100 [RON 20 plus 4 times the Agency: Brasov Water and Sewerage Company Office of Székesfehérvár, and Land Registry standard fee (RON 20) for the fast-track Time: 17 days Department, Székesfehérvár District Office, procedure] Cost: RON 220 Fejér County Government Office Time: 43 days Procedure 13. Obtain building permit Procedure 6*. Obtain project clearance Agency: Department of Urbanism of the Brasov Cost: HUF 120,300 [HUF 100,000 (fee for occupancy permit over 250 sq. m.) + HUF from electricity company City Hall 5,000 (standard fee) + HUF 8,700 (fee for Agency: Electricity Distribution Company Time: 40 days review of documentation by Public Health Unit) Transilvania South Cost: RON 17,555 (1% of the value of + HUF 6,600 (fee for modification of the site Time: 14 days construction) map and the site ownership certificate by the Cost: RON 95 Land Registry)] Procedure 14. Notify City Hall of Procedure 7*. Obtain project clearance commencement of construction Source: Doing Business database. from Brasov Regional Environmental Agency: Department of Urbanism of the Brasov Note: Additional information on each procedure can be Protection Agency found at www.doingbusiness.org/EU1. City Hall Agency: Brasov Regional Environmental Time: 1 day Protection Agency Cost: None Time: 21 days Cost: RON 500 (RON 400 to the Procedure 15*. Notify Brasov Environmental Protection Agency and RON 100 DEALING WITH CONSTRUCTION PERMITS Construction Inspectorate of for newspaper advertisements) commencement of construction and ROMANIA submit schedule of inspections Procedure 8*. Obtain project clearance Agency: Brasov Construction Inspectorate Brasov (Romania) from Tara Barsei Inspectorate for Time: 1 day Warehouse value: RON 1,755,459 (US$475,000) Emergency Situations Cost: RON 10,533 (0.1% plus 0.5% of the value Data as of: December 31, 2016 Agency: Tara Barsei Inspectorate for Emergency of construction) Situations Time: 15 days Procedure 1. Obtain topographical Procedure 16*. Notify Brasov Labor Cost: None documentation Inspectorate of commencement of Agency: Topographical engineer construction Procedure 9*. Obtain project clearance Time: 14 days Agency: Brasov Labor Inspectorate from Health Department Cost: RON 1,500 Time: 1 day Agency: Brasov Public Health Department Cost: None Procedure 2. Obtain approval of Time: 7 days topographical documentation and land Cost: RON 250 [RON 200 plus RON 50 (fast-track fee)] Procedure 17. Receive foundations work registry excerpt from National Agency inspection for Cadastre and Land Registration Agency: Brasov Construction Inspectorate (NACLR) Procedure 10*. Sign contract with solid waste authority (Comprest/Urban) Time: 1 day Agency: Brasov County Office of National Cost: None Agency for Cadastre and Land Registration Agency: Comprest/Urban (NACLR) Time: 1 day Time: 21 days Cost: RON 813 Procedure 18. Receive frame inspection Agency: Brasov Construction Inspectorate Cost: RON 220 (RON 200 for the topographical study approval plus RON 20 for Time: 1 day the land registry excerpt) Cost: None *Simultaneous with previous procedure 150 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 19. Notify City Hall of DEALING WITH CONSTRUCTION PERMITS Procedure 8*. Obtain project clearance completion of construction and request Bucharest (Romania) from Health Department final assessment Agency: Bucharest Public Health Department Agency: Department of Urbanism of the Brasov Warehouse value: RON 1,755,459 (US$475,000) Time: 7 days City Hall Data as of: December 31, 2016 Cost: RON 250 [RON 200 plus RON 50 Time: 1 day (fast-track fee)] Cost: None Procedure 1. Obtain topographical documentation Procedure 9*. Sign contract with solid Procedure 20*. Notify Brasov Agency: Topographical engineer waste authority (REBU SA) Construction Inspectorate of completion Time: 7 days Agency: REBU SA of construction and request final Cost: RON 2,000 Time: 1 day assessment Cost: RON 2,667 (RON 75 per cubic meter of Procedure 2. Obtain approval of waste + RON 42 for tax) Agency: Brasov Construction Inspectorate topographical documentation and land Time: 1 day registry excerpt from National Agency Cost: None Procedure 10*. Obtain updated land for Cadastre and Land Registration registry excerpt from National Agency (NACLR) Procedure 21. Receive final inspection for Cadastre and Land Registration Agency: Bucharest office of the National from Acceptance Commission (NACLR) Agency for Cadastre and Land Registration Agency: Acceptance Commission Agency: Bucharest office of the National Time: 15 days Time: 1 day Agency for Cadastre and Land Registration Cost: RON 220 (RON 200 for the Cost: None Time: 2 days topographical study approval plus RON 20 for the land registry excerpt) Cost: RON 20 Procedure 22. Obtain final assessment of construction from Acceptance Procedure 3. Obtain urban planning Procedure 11*. Notarize statement Commission certificate about nonexistence of land disputes Agency: Acceptance Commission Agency: Department of Urbanism of the local Agency: Notary Time: 18 days City Hall Time: 1 day Cost: None Time: 30 days Cost: RON 15 Cost: RON 14 Procedure 23. Pay tax adjustment at Procedure 12*. Register project with City Hall and Brasov Construction Procedure 4. Obtain project clearance Order of Architects and pay architecture Inspectorate from Bucharest Regional Environmental stamp duty Protection Agency Agency: Order of Architects Agency: City Hall/Brasov Construction Inspectorate Agency: Bucharest Regional Environmental Time: 1 day Protection Agency Cost: RON 928 (RON 50 plus 0.05% of the Time: 1 day Time: 21 days value of construction) Cost: None Cost: RON 500 (RON 400 to the Environmental Protection Agency and RON 100 Procedure 24*. Obtain water and Procedure 13. Obtain building permit for newspaper advertisements) sewerage connection (Brasov Water and Agency: Department of Urbanism of the local Sewerage Company) City Hall Procedure 5*. Obtain project clearance Time: 30 days Agency: Brasov Water and Sewerage Company from water supply and sewerage Time: 60 days Cost: RON 17,555 (1% of the value of authority (Apa Nova SA Bucharest) construction) Cost: RON 15,000 Agency: Apa Nova SA Bucharest Time: 18 days Procedure 25*. Obtain certificate Procedure 14. Notify City Hall of Cost: RON 72 attesting existence of construction from commencement of construction City Hall Agency: Department of Urbanism of the local Procedure 6*. Obtain project clearance City Hall Agency: City Hall from electricity company Time: 1 day Time: 1 day Agency: e-distribution Muntenia Cost: None Cost: None Time: 15 days Cost: RON 95 Procedure 15*. Notify Bucharest Procedure 26. Register building with Construction Inspectorate of National Agency for Cadastre and Land Procedure 7*. Obtain project clearance commencement of construction and Registration (NACLR) from General Inspectorate for submit schedule of inspections Agency: Brasov County Office of National Emergency Situations Agency: Bucharest Construction Inspectorate Agency for Cadastre and Land Registration Agency: Bucuresti-Ilfov Inspectorate for Time: 1 day (NACLR) Emergency Situations Cost: RON 10,533 (0.1% plus 0.5% of the value Time: 15 days Time: 15 days of construction) Cost: RON 938 (RON 60 + 0.05% of the value Cost: None of construction) *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 151 Procedure 16*. Notify Bucharest Labor Procedure 24. Register building with Procedure 7*. Obtain project clearance Inspectorate of commencement of National Agency for Cadastre and Land from Traffic Safety Unit of City Hall construction Registration (NACLR) Agency: Cluj City Hall Agency: Bucharest Labor Inspectorate Agency: Bucharest office of the National Time: 15 days Time: 1 day Agency for Cadastre and Land Registration Cost: None Cost: None Time: 30 days Cost: RON 938 (RON 60 + 0.05% of the value Procedure 8*. Obtain project clearance Procedure 17. Receive foundations work of construction) from water supply and sewerage inspection authority DEALING WITH CONSTRUCTION PERMITS Agency: Bucharest Construction Inspectorate Agency: Somes SA Water and Sewerage Time: 1 day Cluj-Napoca (Romania) Authority Cost: None Time: 14 days Warehouse value: RON 1,755,459 (US$475,000) Cost: RON 66 Data as of: December 31, 2016 Procedure 18. Receive frame inspection Agency: Bucharest Construction Inspectorate Procedure 1. Obtain topographical Procedure 9. Obtain project clearance Time: 1 day documentation from Cluj Inspectorate for Emergency Cost: None Agency: Topographical engineer Situations Time: 15 days Agency: Cluj Inspectorate for Emergency Procedure 19. Notify City Hall of Cost: RON 900 Situations completion of construction and request Time: 14 days final assessment Procedure 2*. Obtain land registry Cost: None Agency: Department of Urbanism of the local excerpt and the cadastral sketch from City Hall National Agency for Cadastre and Land Procedure 10*. Obtain project clearance Time: 1 day Registration (NACLR) from Health Department Cost: None Agency: Cluj County Office of National Agency Agency: Cluj Public Health Department for Cadastre and Land Registration (NACLR) Time: 7 days Procedure 20*. Notify Bucharest Time: 8 days Cost: RON 250 [RON 200 plus RON 50 Construction Inspectorate of completion Cost: RON 35 (RON 20 for the land registry (fast-track fee)] of construction and request final excerpt plus RON 15 for the cadastral sketch) assessment Procedure 11*. Sign contract with solid Procedure 3. Obtain topographical waste authority Agency: Bucharest Construction Inspectorate documentation registration from Agency: Bratner/Rosal Time: 1 day National Agency for Cadastre and Land Time: 1 day Cost: None Registration (NACLR) Cost: RON 31 Agency: Cluj County Office of National Agency Procedure 21. Receive final inspection for Cadastre and Land Registration (NACLR) and obtain final assessment from Procedure 12*. Register project with Time: 15 days Acceptance Commission Order of Architects Cost: RON 200 Agency: Acceptance Commission Agency: Order of Architects Time: 15 days Time: 4 days Procedure 4. Obtain urban planning Cost: None Cost: RON 50 certificate Agency: Department of Urbanism of the Cluj Procedure 22. Obtain water and City Hall Procedure 13*. Obtain updated land sewerage connection (Apa Nova SA Time: 30 days registry excerpt from National Agency Bucuresti) for Cadastre and Land Registration Cost: RON 12 Agency: Apa Nova SA Bucharest (NACLR) Time: 75 days Agency: Cluj County Office of National Agency Procedure 5. Obtain project clearance Cost: RON 2,300 (RON 520 for connection for Cadastre and Land Registration (NACLR) fee + RON 62 for application fee + RON 1,150 from Cluj Environmental Protection Time: 3 days connection works + RON 568.44 for meter) Agency Cost: RON 20 Agency: Cluj Environmental Protection Agency Procedure 23. Obtain certificate Time: 21 days Cost: RON 500 (RON 400 to the Procedure 14. Obtain building permit attesting existence of construction from Environmental Protection Agency and RON 100 and pay architecture stamp duty City Hall for newspaper advertisements) Agency: Department of Urbanism of the Cluj Agency: Department of Urbanism of the City Hall Bucharest City Hall Procedure 6. Obtain project clearance Time: 30 days Time: 30 days from electricity company Cost: RON 18,432 (1% plus 0.05% of the value Cost: None of construction) Agency: Electricity Distribution Company Transilvania North Time: 30 days Cost: RON 95 *Simultaneous with previous procedure 152 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 15. Notify City Hall of Procedure 23. Receive final inspection Procedure 2. Obtain urban planning commencement of construction from Acceptance Commission certificate Agency: Department of Urbanism of the Cluj Agency: Acceptance Commission Agency: Department of Urbanism of the City Hall Time: 1 day Constanta City Hall Time: 1 day Cost: None Time: 32 days Cost: None Cost: RON 12 Procedure 24. Obtain final assessment Procedure 16*. Notify Cluj Construction of construction from Acceptance Procedure 3*. Obtain topographical Inspectorate of commencement of Commission documentation construction and submit schedule of Agency: Topographical engineer Agency: Acceptance Commission inspections Time: 2 days Time: 15 days Agency: Cluj Construction Inspectorate Cost: RON 1,200 Cost: None Time: 1 day Cost: RON 10,533 (0.1% plus 0.5% of the value Procedure 4. Obtain topographical Procedure 25. Obtain updated land of construction) documentation registration from registry excerpt from National Agency National Agency for Cadastre and Land for Cadastre and Land Registration Procedure 17*. Notify Cluj Labor Registration (NACLR) (NACLR) Inspectorate of commencement of Agency: Constanta County Office of National Agency: Cluj County Office of National Agency Agency for Cadastre and Land Registration construction for Cadastre and Land Registration (NACLR) (NACLR) Agency: Cluj Labor Inspectorate Time: 3 days Time: 25 days Time: 1 day Cost: RON 20 Cost: RON 200 Cost: None Procedure 26. Obtain certificate Procedure 5. Obtain project clearance Procedure 18. Receive foundations work attesting existence of construction from from Constanta Environmental inspection City Hall Protection Agency Agency: Cluj Construction Inspectorate Agency: Department of Urbanism of the Cluj Agency: Constanta Environmental Protection Time: 1 day City Hall Agency Cost: None Time: 2 days Time: 21 days Cost: RON 10 Cost: RON 500 (RON 400 to the Procedure 19. Receive frame inspection Environmental Protection Agency and RON 100 Agency: Cluj Construction Inspectorate Procedure 27. Register building with for newspaper advertisements) Time: 1 day National Agency for Cadastre and Land Cost: None Registration (NACLR) Procedure 6. Obtain project clearance Agency: Cluj County Office of National Agency from water supply and sewerage Procedure 20. Notify City Hall of for Cadastre and Land Registration (NACLR) authority completion of construction and request Time: 15 days Agency: RAJA Constanta final assessment Cost: RON 938 (RON 60 + 0.05% of the value Time: 30 days Agency: Department of Urbanism of the Cluj of construction) Cost: RON 167 City Hall Time: 3 days DEALING WITH CONSTRUCTION PERMITS Procedure 7*. Obtain project clearance Cost: None Constanta (Romania) from Road Police Agency: Constanta Road Police Warehouse value: RON 1,755,459 (US$475,000) Procedure 21. Notify Cluj Construction Data as of: December 31, 2016 Time: 30 days Inspectorate of completion of Cost: RON 100 construction and request final Procedure 1. Obtain land registry assessment Procedure 8*. Obtain project clearance excerpt and location plans from Agency: Cluj Construction Inspectorate from Dobrogea Inspectorate for National Agency for Cadastre and Land Time: 1 day Emergency Situations Registration (NACLR) Cost: None Agency: Dobrogea Inspectorate for Emergency Agency: Constanta County Office of National Agency for Cadastre and Land Registration Situations Procedure 22*. Obtain water and (NACLR) Time: 30 days sewerage connection Time: 3 days Cost: None Agency: Somes SA Water and Sewerage Cost: RON 50 (RON 20 for the land registry Authority excerpt plus RON 30 for the certified copies of Procedure 9*. Obtain project clearance Time: 75 days plans) from electricity company Cost: RON 1,702 (RON 65.81 for plan clearance Agency: e-distribution Dobrogea + RON 65.81 for reception clearance + RON 50 Time: 25 days for the meter + RON 20 for special fire security Cost: RON 95 + at least RON 1,500 for the execution works) *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 153 Procedure 10*. Obtain project clearance Procedure 18. Receive frame inspection DEALING WITH CONSTRUCTION PERMITS from Health Department Agency: Constanta Construction Inspectorate Craiova (Romania) Agency: Constanta Public Health Department Time: 1 day Time: 7 days Cost: None Warehouse value: RON 1,755,459 (US$475,000) Cost: RON 250 [RON 200 plus RON 50 Data as of: December 31, 2016 (fast-track fee)] Procedure 19. Notify City Hall of completion of construction and request Procedure 1. Obtain land registry Procedure 11*. Obtain updated land final assessment excerpt and situation plan from registry excerpt from National Agency Agency: Department of Urbanism of the National Agency for Cadastre and Land for Cadastre and Land Registration Constanta City Hall Registration (NACLR) (NACLR) Time: 1 day Agency: Dolj County Office of National Agency Agency: Constanta County Office of National Cost: None for Cadastre and Land Registration (NACLR) Agency for Cadastre and Land Registration Time: 5 days (NACLR) Procedure 20*. Notify Constanta Cost: RON 50 (RON 20 for the land registry Time: 3 days Construction Inspectorate of completion excerpt plus RON 30 for the certified copies of Cost: [RON 20 plus 4 times the standard fee of construction, request final assessment plans) (RON 20) for the fast-track procedure] and pay tax adjustment Agency: Constanta Construction Inspectorate Procedure 2. Obtain copy of the general Procedure 12*. Register project with Time: 1 day urban plan and certificate of street Order of Architects Cost: None nomenclature Agency: Craiova City Hall Agency: Order of Architects Procedure 21. Receive final inspection Time: 10 days Time: 3 days from Acceptance Commission Cost: RON 18 (RON 8 for the general urban Cost: RON 50 Agency: Acceptance Commission plan copy plus RON 10 for the certificate of street nomenclature) Procedure 13. Obtain building permit Time: 1 day and pay architecture stamp duty Cost: None Procedure 3. Obtain urban planning Agency: Constanta City Hall certificate Procedure 22. Obtain final assessment Time: 45 days Agency: Department of Urbanism of the of construction from Acceptance Cost: RON 18,432 (1% plus 0.05% of the value Craiova City Hall of construction) Commission Time: 30 days Agency: Acceptance Commission Cost: RON 14 Time: 21 days Procedure 14. Notify City Hall of Cost: None commencement of construction Procedure 4*. Obtain project clearance Agency: Department of Urbanism of the from Dolj Environmental Protection Procedure 23. Obtain certificate Constanta City Hall Agency attesting existence of construction from Time: 1 day Agency: Dolj Environmental Protection Agency City Hall Cost: None Time: 21 days Agency: Department of Urbanism of the Constanta City Hall Cost: RON 500 (RON 400 to the Procedure 15*. Notify Constanta Environmental Protection Agency and RON 100 Time: 30 days Construction Inspectorate of for newspaper advertisements) Cost: None commencement of construction and submit schedule of inspections Procedure 5. Obtain project clearance Procedure 24. Obtain water and Agency: Constanta Construction Inspectorate from electricity company sewerage connection (RAJA) Time: 1 day Agency: Distribution Oltenia Agency: RAJA Constanta Cost: RON 10,533 (0.1% plus 0.5% of the value Time: 21 days Time: 75 days of construction) Cost: RON 95 Cost: RON 67,950 (RON 167.36 for the initial clearance + RON 269.82 for the technical Procedure 6*. Obtain project clearance Procedure 16*. Notify Constanta Labor clearance from RAJA + RON 13 for the City Hall clearance + RON 225 per meter for the water from water supply and sewerage Inspectorate of commencement of connection works + RON 225 per meter for the authority construction sewerage connection works) Agency: Oltenia Water and Sewerage Authority Agency: Constanta Labor Inspectorate Time: 18 days Time: 1 day Procedure 25. Register building with Cost: RON 111 Cost: None National Agency for Cadastre and Land Registration (NACLR) Procedure 7*. Obtain project clearance Procedure 17. Receive foundations work Agency: Constanta County Office of National from Dolj Inspectorate for Emergency inspection Agency for Cadastre and Land Registration Situations Agency: Constanta Construction Inspectorate (NACLR) Agency: Dolj Inspectorate for Emergency Time: 1 day Time: 15 days Situations Cost: None Cost: RON 938 (RON 60 + 0.05% of the value Time: 15 days of construction) Cost: None *Simultaneous with previous procedure 154 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 8*. Obtain project clearance Procedure 16. Receive foundations work Procedure 24. Obtain water and from Health Department inspection sewerage connection Agency: Dolj Public Health Department Agency: Dolj Construction Inspectorate Agency: Oltenia Water and Sewerage Authority Time: 7 days Time: 1 day Time: 60 days Cost: RON 250 [RON 200 plus RON 50 Cost: None Cost: RON 2,480 (RON 140 water connection (fast-track fee)] fee + RON 140 sewerage connection fee + Procedure 17. Receive frame inspection RON 1,200 for construction + RON 1,000 for Procedure 9*. Sign contract with solid connection works) Agency: Dolj Construction Inspectorate waste authority Time: 1 day Agency: SC Salubritate Craiova SRL Cost: None Procedure 25. Register building with Time: 1 day National Agency for Cadastre and Land Cost: RON 37 Registration (NACLR) Procedure 18. Notify City Hall of Agency: Dolj County Office of National Agency completion of construction and request for Cadastre and Land Registration (NACLR) Procedure 10*. Register project with final assessment Time: 15 days Order of Architects and pay architecture Agency: Department of Urbanism of the Cost: RON 938 (RON 60 + 0.05% of the value stamp duty Craiova City Hall of construction) Agency: Order of Architects Time: 1 day Time: 1 day Cost: None DEALING WITH CONSTRUCTION PERMITS Cost: RON 928 (RON 50 plus 0.05% of the value of construction) Procedure 19*. Notify Dolj Construction Iasi (Romania) Inspectorate of completion of Warehouse value: RON 1,755,459 (US$475,000) Procedure 11*. Obtain updated land construction and request final Data as of: December 31, 2016 registry excerpt from National Agency assessment for Cadastre and Land Registration Agency: Dolj Construction Inspectorate Procedure 1. Obtain land registry (NACLR) Time: 1 day excerpt and updated location plans from Agency: Dolj County Office of National Agency Cost: None National Agency for Cadastre and Land for Cadastre and Land Registration (NACLR) Registration (NACLR) Time: 3 days Procedure 20. Receive final inspection Agency: Iasi County Office of National Agency Cost: RON 20 from Acceptance Commission for Cadastre and Land Registration (NACLR) Agency: Acceptance Commission Time: 5 days Procedure 12. Obtain building permit Time: 1 day Cost: RON 50 (RON 20 for the land registry Agency: Department of Urbanism of the Cost: None excerpt plus RON 30 for the certified copies of Craiova City Hall plans) Time: 30 days Procedure 21. Obtain final assessment Cost: RON 17,555 (1% of the value of Procedure 2. Obtain urban planning of construction from Acceptance construction) certificate Commission Agency: Department of Urbanism of the Iasi Agency: Acceptance Commission Procedure 13. Notify Dolj Construction City Hall Time: 18 days Inspectorate of commencement of Time: 30 days Cost: None construction and submit schedule of Cost: RON 14 inspections Procedure 22. Pay tax adjustment and Procedure 3*. Obtain topographical Agency: Dolj Construction Inspectorate register final assessment with the Dolj documentation Time: 10 days Construction Inspectorate Agency: Topographical engineer Cost: RON 10,533 (0.1% plus 0.5% of the value of construction) Agency: Dolj Construction Inspectorate Time: 3 days Time: 1 day Cost: RON 900 Cost: None Procedure 14*. Notify City Hall of commencement of construction Procedure 4. Obtain topographical Agency: Department of Urbanism of the Procedure 23. Obtain certificate documentation registration from Craiova City Hall attesting existence of construction from National Agency for Cadastre and Land Time: 1 day City Hall Registration (NACLR) Cost: None Agency: Department of Urbanism of the Agency: Iasi County Office of National Agency Craiova City Hall for Cadastre and Land Registration (NACLR) Time: 1 day Time: 21 days Procedure 15*. Notify Dolj Labor Cost: None Cost: RON 200 Inspectorate of commencement of construction Procedure 5. Obtain project clearance Agency: Dolj Labor Inspectorate from electricity company Time: 1 day Agency: Delgaz Grid Cost: None Time: 30 days Cost: RON 95 *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 155 Procedure 6*. Obtain project clearance Procedure 14*. Register project with Procedure 22*. Notify Iasi Construction from Circulation Committee Order of Architects and pay architecture Inspectorate of completion of Agency: Iasi City Hall stamp duty construction, request final assessment Time: 30 days Agency: Order of Architects and pay tax adjustment Cost: RON 100 Time: 3 days Agency: Iasi Construction Inspectorate Cost: RON 928 (RON 50 plus 0.05% of the Time: 1 day Procedure 7*. Obtain project clearance value of construction) Cost: None from water supply and sewerage authority Procedure 15. Obtain building permit Procedure 23. Receive final inspection Agency: Apavital SA Agency: Department of Urbanism of the Iasi from Acceptance Commission Time: 15 days City Hall Agency: Acceptance Commission Cost: RON 81 Time: 30 days Time: 1 day Cost: RON 17,555 (1% of the value of Cost: None construction) Procedure 8*. Obtain project clearance from Slope Committee of City Hall Procedure 24. Obtain final assessment Agency: Iasi City Hall Procedure 16. Notify City Hall of of construction from Acceptance Time: 14 days commencement of construction Commission Cost: RON 100 Agency: Department of Urbanism of the Iasi Agency: Acceptance Commission City Hall Time: 18 days Time: 1 day Procedure 9. Obtain project clearance Cost: None Cost: None from Iasi Inspectorate for Emergency Situations Procedure 25. Obtain water and Agency: Iasi Inspectorate for Emergency Procedure 17*. Notify Iasi Construction sewerage connection Situations Inspectorate of commencement of Agency: Apavital SA Time: 15 days construction and submit schedule of Time: 75 days Cost: None inspections Cost: RON 911 (RON 435.48 for drafting the Agency: Iasi Construction Inspectorate plans/project + RON 475.81 for final connection Time: 1 day clearance) Procedure 10*. Obtain project clearance Cost: RON 10,533 (0.1% plus 0.5% of the value from Health Department of construction) Agency: Iasi Public Health Department Procedure 26. Register building with Time: 7 days National Agency for Cadastre and Land Cost: RON 250 [RON 200 plus RON 50 Procedure 18*. Notify Iasi Labor Registration (NACLR) (fast-track fee)] Inspectorate of commencement of Agency: Iasi County Office of National Agency construction for Cadastre and Land Registration (NACLR) Agency: Iasi Labor Inspectorate Time: 12 days Procedure 11*. Sign contract with solid Time: 1 day Cost: RON 938 (RON 60 + 0.05% of the value waste authority Cost: None of construction) Agency: SalubrIS Time: 1 day Cost: RON 30 Procedure 19. Receive foundations work DEALING WITH CONSTRUCTION PERMITS inspection Oradea (Romania) Agency: Iasi Construction Inspectorate Procedure 12. Obtain project clearance Warehouse value: RON 1,755,459 (US$475,000) Time: 1 day from Iasi Environmental Protection Data as of: December 31, 2016 Cost: None Agency Agency: Iasi Environmental Protection Agency Procedure 1. Obtain land registry Time: 21 days Procedure 20. Receive frame inspection Agency: Iasi Construction Inspectorate excerpt from National Agency for Cost: RON 500 (RON 400 to the Cadastre and Land Registration (NACLR) Environmental Protection Agency and RON 100 Time: 1 day Cost: None Agency: Bihor County Office of National for newspaper advertisements) Agency for Cadastre and Land Registration (NACLR) Procedure 13*. Obtain updated land Procedure 21. Notify City Hall of Time: 3 days registry excerpt from National Agency completion of construction and request Cost: RON 20 for Cadastre and Land Registration final assessment (NACLR) Agency: Department of Urbanism of the Iasi Procedure 2. Obtain urban planning Agency: Iasi County Office of National Agency City Hall certificate for Cadastre and Land Registration (NACLR) Time: 1 day Agency: Chief Architect of the Oradea City Hall Time: 3 days Cost: None Time: 18 days Cost: RON 20 Cost: RON 15 *Simultaneous with previous procedure 156 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 3. Obtain project clearance Procedure 10*. Obtain updated land Procedure 18. Notify Bihor Construction from Bihor Environmental Protection registry excerpt from National Agency Inspectorate of completion of Agency for Cadastre and Land Registration construction and request final Agency: Bihor Environmental Protection (NACLR) assessment Agency Agency: Bihor County Office of National Agency: Bihor Construction Inspectorate Time: 21 days Agency for Cadastre and Land Registration Time: 1 day Cost: RON 750 (RON 400 to the (NACLR) Cost: None Environmental Protection Agency and RON Time: 3 days 350 for newspaper advertisements) Cost: RON 100 (RON 20 plus 4 times the Procedure 19*. Notify City Hall of standard fee (RON 20) for the fast-track completion of construction and request Procedure 4. Obtain project clearance procedure) final assessment from Crisana Inspectorate for Agency: Oradea City Hall Emergency Situations Procedure 11*. Sign contract with solid Time: 1 day Agency: Crisana Inspectorate for Emergency waste authority Cost: None Situations Agency: SC RER Ecologic Service Oradea SA Time: 25 days Time: 1 day Procedure 20. Receive final inspection Cost: None Cost: RON 194 and obtain final assessment from Acceptance Commission Procedure 5*. Obtain project clearance Procedure 12. Obtain building permit Agency: Acceptance Commission from Road Police and pay architecture stamp duty Time: 15 days Agency: Oradea Road Police Agency: Oradea City Hall Cost: None Time: 19 days Time: 12 days Cost: RON 100 Cost: RON 18,432 (1% plus 0.05% of the value Procedure 21. Register final assessment of construction) with City Hall, pay tax adjustment and Procedure 6*. Obtain project clearance request operating permit from electricity company Procedure 13. Notify City Hall of Agency: Oradea City Hall Agency: Electricity Distribution Company commencement of construction Time: 1 day Transilvania North Agency: Oradea City Hall Cost: None Time: 18 days Time: 1 day Cost: RON 95 Cost: None Procedure 22. Obtain water and sewerage connection Agency: Oradea Water and Sewerage Authority Procedure 7*. Obtain project clearance Procedure 14*. Notify Bihor SA from water supply and sewerage Construction Inspectorate of Time: 25 days authority commencement of construction and Cost: RON 101,250 (RON 225 per meter for Agency: Oradea Water and Sewerage Authority submit schedule of inspections water plus RON 450 per meter for sewerage) SA Agency: Bihor Construction Inspectorate Time: 12 days Time: 1 day Procedure 23*. Obtain updated land Cost: RON 161 Cost: RON 10,533 (0.1% plus 0.5% of the value registry excerpt from National Agency of construction) for Cadastre and Land Registration Procedure 8*. Obtain project clearance (NACLR) from Health Department Procedure 15*. Notify Bihor Labor Agency: Bihor County Office of National Agency: Bihor Public Health Department Inspectorate of commencement of Agency for Cadastre and Land Registration Time: 7 days construction (NACLR) Cost: RON 250 [RON 200 plus RON 50 Agency: Bihor Labor Inspectorate Time: 3 days (fast-track fee)] Time: 1 day Cost: RON 20 Cost: None Procedure 9*. Register project with Procedure 24. Obtain operating permit Order of Architects Procedure 16. Receive foundations work from City Hall Agency: Order of Architects inspection Agency: Oradea City Hall Time: 7 days Agency: Bihor Construction Inspectorate Time: 5 days Cost: RON 20 Time: 1 day Cost: None Cost: None Procedure 25. Register building with Procedure 17. Receive frame inspection National Agency for Cadastre and Land Agency: Bihor Construction Inspectorate Registration (NACLR) Agency: Bihor County Office of National Time: 1 day Agency for Cadastre and Land Registration Cost: None (NACLR) Time: 24 days Cost: RON 938 (RON 60 + 0.05% of the value of construction) *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 157 DEALING WITH CONSTRUCTION PERMITS Procedure 8*. Obtain project clearance Procedure 16*. Notify Prahova Ploiesti (Romania) from Health Department Construction Inspectorate of Agency: Prahova Public Health Department commencement of construction Warehouse value: RON 1,755,459 (US$475,000) Time: 7 days and receive approval of schedule of Data as of: December 31, 2016 Cost: RON 250 [RON 200 plus RON 50 inspections (fast-track fee)] Agency: Prahova Construction Inspectorate Procedure 1. Obtain topographical Time: 1 day documentation Procedure 9*. Sign contract with solid Cost: RON 10,533 (0.1% plus 0.5% of the value Agency: Topographical engineer waste authority of construction) Time: 14 days Agency: ROSAL/VEOLIA Cost: RON 1,000 Time: 1 day Procedure 17*. Notify Prahova Labor Cost: RON 200 Inspectorate of commencement of Procedure 2. Obtain land registry construction excerpt and topographical Procedure 10. Obtain approval of solid Agency: Prahova Labor Inspectorate documentation registration from waste removal plan from Ploiesti Public Time: 1 day National Agency for Cadastre and Land Services Company (RASP) Cost: None Registration (NACLR) Agency: RASP Agency: Prahova County Office of National Procedure 18. Receive foundations work Time: 10 days Agency for Cadastre and Land Registration Cost: RON 180 inspection (NACLR) Agency: Prahova Construction Inspectorate Time: 30 days Procedure 11*. Obtain updated land Time: 1 day Cost: RON 220 (RON 20 for the land registry excerpt plus RON 200 for the topographical registry excerpt from National Agency Cost: None documentation registration) for Cadastre and Land Registration (NACLR) Procedure 19. Receive frame inspection Procedure 3. Obtain urban planning Agency: Prahova County Office of National Agency: Prahova Construction Inspectorate certificate Agency for Cadastre and Land Registration Time: 1 day Agency: Department of Urbanism of the (NACLR) Cost: None Ploiesti City Hall Time: 3 days Time: 30 days Cost: RON 100 (RON 20 plus 4 times the Procedure 20. Notify City Hall of Cost: RON 14 standard fee (RON 20) for the fast-track completion of construction, request final procedure) assessment and pay tax adjustment Procedure 4. Obtain project clearance Agency: Department of Urbanism of Ploiesti from Prahova Environmental Protection Procedure 12*. Notarize statement City Hall Agency about Nonexistence of land disputes Time: 1 day Agency: Prahova Environmental Protection Agency: Notary Cost: None Agency Time: 1 day Time: 21 days Cost: RON 23 Procedure 21. Receive final inspection Cost: RON 550 (RON 400 to the from Acceptance Commission Environmental Protection Agency and RON 150 Procedure 13*. Register project with for newspaper advertisements) Agency: Acceptance Commission Order of Architects and pay architecture Time: 1 day stamp duty Cost: None Procedure 5. Obtain project clearance Agency: Order of Architects from electricity company Time: 2 days Agency: Electricity Distribution Company Procedure 22. Declare value of Cost: RON 928 (RON 50 plus 0.05% of the Muntenia North construction to City Hall and pay tax value of construction) Time: 21 days adjustment Cost: RON 95 Agency: Ploiesti City Hall Procedure 14. Obtain building permit Time: 1 day Procedure 6*. Obtain project clearance Agency: Department of Urbanism of Ploiesti Cost: None City Hall from Prahova Inspectorate for Time: 30 days Emergency Situations Procedure 23. Notify Prahova Cost: RON 17,555 (1% of the value of Agency: Prahova Inspectorate for Emergency Construction Inspectorate of completion construction) Situations of construction and pay tax adjustment Time: 15 days Agency: Prahova Construction Inspectorate Cost: None Procedure 15. Notify City Hall of Time: 1 day commencement of construction Cost: None Agency: Department of Urbanism of the Procedure 7*. Obtain project clearance Ploiesti City Hall from water supply and sewerage Time: 1 day authority Cost: None Agency: Apa Nova SA Ploiesti Time: 14 days Cost: RON 134 *Simultaneous with previous procedure 158 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 24. Obtain final assessment Procedure 4*. Obtain topographical Procedure 12. Obtain solid waste of construction from Acceptance documentation disposal clearance from Environment Commission Agency: Topographical engineer Division of City Hall Agency: Acceptance Commission Time: 14 days Agency: Environment Division of the Timisoara Time: 18 days Cost: RON 1,000 City Hall Cost: None Time: 14 days Procedure 5. Obtain topographical Cost: RON 50 Procedure 25. Obtain water and documentation registration from sewerage connection National Agency for Cadastre and Land Procedure 13*. Obtain updated land Agency: Apa Nova SA Ploiesti Registration (NACLR) registry excerpt from National Agency Time: 60 days Agency: Timis County Office of National for Cadastre and Land Registration Cost: RON 7,000 Agency for Cadastre and Land Registration (NACLR) (NACLR) Agency: Timis County Office of National Procedure 26. Obtain certificate Time: 12 days Agency for Cadastre and Land Registration Cost: RON 200 (NACLR) attesting existence of construction from Time: 3 days City Hall Procedure 6. Obtain project clearance Cost: [RON 20 plus 4 times the standard fee Agency: Ploiesti City Hall from Timis Environmental Protection (RON 20) for the fast-track procedure] Time: 1 day Cost: None Agency Agency: Timis Environmental Protection Procedure 14*. Register project with Agency Order of Architects Procedure 27. Register building with Time: 35 days Agency: Order of Architects National Agency for Cadastre and Land Cost: RON 800 (RON 400 for the Time: 2 days Registration (NACLR) Environmental Protection Agency plus 400 Cost: RON 50 Agency: Prahova County Office of National RON for newspaper advertisements Agency for Cadastre and Land Registration (NACLR) Procedure 15. Obtain building permit Time: 24 days Procedure 7. Obtain single utility and pay architecture stamp duty Cost: RON 938 (RON 60 + 0.05% of the value clearance from City Hall Agency: City Hall of construction) Agency: Timisoara City Hall Time: 30 days Time: 30 days Cost: RON 18,432 (1% plus 0.05% of the value DEALING WITH CONSTRUCTION PERMITS Cost: RON 400 of construction) Timisoara (Romania) Procedure 8*. Obtain project clearance Procedure 16. Notify City Hall of Warehouse value: RON 1,755,459 (US$475,000) from Banat Inspectorate for Emergency commencement of construction Data as of: December 31, 2016 Situations Agency: Department of Urbanism of the Agency: Banat Inspectorate for Emergency Timisoara City Hall Procedure 1. Obtain land registry Situations Time: 1 day excerpt from National Agency for Time: 17 days Cost: None Cadastre and Land Registration (NACLR) Cost: None Agency: Timis County Office of National Procedure 17*. Notify Timis Construction Agency for Cadastre and Land Registration Procedure 9*. Obtain project clearance Inspectorate of commencement of (NACLR) from Circulation Committee construction and receive approval of the Time: 3 days Agency: Timisoara City Hall schedule of inspections Cost: RON 20 Time: 14 days Agency: Timis Construction Inspectorate Cost: None Time: 1 day Procedure 2*. Obtain situation and Cost: RON 10,533 (0.1% plus 0.5% of the value location plans from City Hall Procedure 10*. Obtain project clearance of construction) Agency: Timisoara City Hall from Health Department Time: 2 days Agency: Timis Public Health Department Procedure 18*. Notify Timis Labor Cost: RON 30 Time: 7 days Inspectorate of commencement of Cost: RON 250 [RON 200 plus RON 50 construction Procedure 3. Obtain urban planning (fast-track fee)] Agency: Timis Labor Inspectorate certificate Time: 1 day Agency: Department of Urbanism of the Procedure 11*. Sign contract with solid Cost: None Timisoara City Hall waste authority Time: 30 days Agency: Retim SA Procedure 19. Receive foundations work Cost: RON 14 Time: 1 day inspection Cost: None Agency: Timis Construction Inspectorate Time: 1 day Cost: None *Simultaneous with previous procedure INDICATOR DETAILS - DEALING WITH CONSTRUCTION PERMITS 159 Procedure 20. Receive frame inspection Procedure 27. Register building with Agency: Timis Construction Inspectorate National Agency for Cadastre and Land Time: 1 day Registration (NACLR) Cost: None Agency: Timis County Office of National Agency for Cadastre and Land Registration Procedure 21. Notify City Hall of (NACLR) completion of construction, request final Time: 15 days assessment and pay building permit tax Cost: RON 938 (RON 60 + 0.05% of the value of construction) adjustment Agency: Department of Urbanism of the Timisoara City Hall Time: 1 day Source: Doing Business database. Note: Additional information on each procedure can be Cost: None found at www.doingbusiness.org/EU1. Procedure 22*. Notify Timis Construction Inspectorate of completion of construction, request final assessment and pay tax adjustment Agency: Timis Construction Inspectorate Time: 1 day Cost: None Procedure 23. Receive final inspection from Acceptance Commission Agency: Acceptance Commission Time: 1 day Cost: None Procedure 24. Obtain final assessment of construction from Acceptance Commission Agency: Acceptance Commission Time: 18 days Cost: None Procedure 25. Obtain certificate attesting existence of construction from City Hall Agency: Department of Urbanism of the Timisoara City Hall Time: 30 days Cost: RON 200 Procedure 26. Obtain water and sewerage connection Agency: Aquatim SA Time: 90 days Cost: RON 36,200 (RON 180 per meter for sewerage plus RON 45 per meter for water plus RON 2,000 for connection vault plus RON 450 for water meter) *Simultaneous with previous procedure 160 DEALING WITH CONSTRUCTION PERMITS – BUILDING QUALITY CONTROL INDEX BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score Building quality control index (0–15) 13 13 13 Quality of building regulations index (0–2) 2 2 2 In what way are the building regulations (including Available online; Free of charge. 1 Available online; Free of charge. 1 Available online; Free of charge. 1 the building code) or any regulations dealing with construction permits made available? (0–1) Which requirements for obtaining a building permit List of required documents; Fees to be 1 List of required documents; Fees to be 1 List of required documents; Fees to be 1 are clearly specified by the building regulations or by paid; Required preapprovals. paid; Required preapprovals. paid; Required preapprovals. any accessible website, brochure or pamphlet? (0–1) Quality control before construction index (0–1) 1 1 1 Who is part of the committee or team that reviews Licensed architect; Licensed engineer. 1 Licensed architect; Licensed engineer. 1 Licensed architect. 1 and approves building permit applications in the relevant permit-issuing agency? (0–1) Quality control during construction index (0–3) 2 2 2 What types of inspections (if any) are required by Inspections by in-house engineer; 1 Inspections by in-house engineer; 1 Inspections by in-house engineer; 1 law to be carried out during construction? (0–2) Inspections by external engineer or firm; Unscheduled inspections. Inspections at various phases. Inspections at various phases. Do legally mandated inspections occur in practice Mandatory inspections are always done 1 Mandatory inspections are always done 1 Mandatory inspections are always done 1 during construction? (0–1) in practice. in practice. in practice. Quality control after construction index (0–3) 3 3 3 Is there a final inspection required by law to verify Yes, final inspection is done by government 2 Yes, final inspection is done by 2 Yes, final inspection is done by 2 that the building was built in accordance with the agency; Yes, external engineer submits government agency. government agency. approved plans and regulations? (0–2) report for final inspection. Do legally mandated final inspections occur in Final inspection always occurs in practice. 1 Final inspection always occurs in practice. 1 Final inspection always occurs in practice. 1 practice? (0–1) Liability and insurance regimes index (0–2) 2 1 1 Which parties (if any) are held liable by law for Architect or engineer; Professional in 1 Architect or engineer; Construction 1 Architect or engineer; Professional in 1 structural flaws or problems in the building once it charge of the supervision; Construction company; Owner or investor. charge of the supervision; Construction is in use? (0–1) company. company; Owner or investor. DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Which parties (if any) are required by law to obtain Architect or engineer; Professional in 1 No party is required by law to obtain 0 No party is required by law to obtain 0 an insurance policy to cover possible structural flaws charge of the supervision; Construction insurance . insurance . or problems in the building once it is in use? (0–1) company. Professional certifications index (0–4) 3 4 4 What are the qualification requirements for the Minimum number of years of experience; 2 Minimum number of years of experience; 2 Minimum number of years of experience; 2 professional responsible for verifying that the University degree in architecture or University degree in architecture or University degree in architecture or architectural plans or drawings are in compliance engineering; Being a registered architect engineering; Passing a certification exam. engineering; Passing a certification exam. with existing building regulations? (0–2) or engineer. What are the qualification requirements for the University degree in engineering, 1 Minimum number of years of experience; 2 Minimum number of years of experience; 2 professional who supervises the construction on the construction or construction management; University degree in engineering, University degree in engineering, ground? (0–2) Being a registered architect or engineer. construction or construction management; construction or construction management; Being a registered architect or engineer; Passing a certification exam. Passing a certification exam. Source: Doing Business database. INDICATOR DETAILS - GETTING ELECTRICITY 161 GETTING ELECTRICITY GETTING ELECTRICITY LIST OF PROCEDURES Pleven (Bulgaria) Plovdiv (Bulgaria) GETTING ELECTRICITY Name of Utility: CEZ Bulgaria Name of Utility: EVN Bulgaria Data as of: December 31, 2016 Data as of: December 31, 2016 BULGARIA Burgas (Bulgaria) Procedure 1. Apply for and await Procedure 1. Apply for and await preliminary contract preliminary contract Name of Utility: EVN Bulgaria Agency: CEZ Distribution Bulgaria Agency: EVN Bulgaria Distribution Data as of: December 31, 2016 Time: 25 days Time: 25 days Cost: BGN 212 Cost: BGN 183 Procedure 1. Apply for and await preliminary contract Procedure 2. Await completion and Procedure 2. Apply for and await final Agency: EVN Bulgaria Distribution approval of project design contract Time: 25 days Agency: Electrical design firm, construction Agency: EVN Bulgaria Distribution Cost: BGN 183 supervision firm Time: 30 days Time: 67 days Cost: BGN 12,166 [BGN 8,000 (without VAT) Procedure 2. Apply for and await final Cost: BGN 5,800 [BGN 2,400 preparation of the fixed component of the connection fee for contract design + BGN 3,000 fee paid to the construction customers with power capacity in the range Agency: EVN Bulgaria Distribution supervision company for the whole process (i.e. of 101-200 kW (based on a connection with Time: 30 days until issuance of the Act 16) + BGN 400 fees paid a length less than 25 meters) + BGN 4,166.25 to other agencies/utilities for their approval of the (without VAT) variable component of the Cost: BGN 12,166 [BGN 8,000 (without VAT) design] Note: The fee paid to CEZ Distribution for connection fee (for every additional meter above fixed component of the connection fee for the approval of the design is included in the 25 meters, the customer pays BGN 33.33/ customers with power capacity in the range BGN 1,150 paid as part of Procedure 3. meter)] of 101-200 kW (based on a connection with a length less than 25 meters) + BGN 4,166.25 (without VAT) variable component of the Procedure 3. Apply for and await final Procedure 3. Await completion and connection fee (for every additional meter above contract approval of project design, and 25 meters, the customer pays BGN 33.33/ Agency: CEZ Distribution Bulgaria issuance of construction permit and meter)] Time: 30 days other authorizations Cost: BGN 1,150 Agency: EVN Bulgaria Distribution, Plovdiv Procedure 3. Await completion and Municipality approval of project design, and Procedure 4. Obtain construction Time: 112 days issuance of construction permit and permit and other authorizations Cost: None other authorizations Agency: Pleven Municipality, construction Agency: EVN Bulgaria Distribution, Burgas supervision firm Time: 45 days Procedure 4. Await completion of Municipality Cost: BGN 198 [BGN 150 fee paid to Pleven external works, inspections and Time: 108 days municipality for the approval of the design (BGN issuance of relevant documents Cost: None 1/meter of cable) + BGN 47.5 fee paid to Pleven Agency: EVN Bulgaria Distribution municipality for the issuance of the construction Time: 57 days Procedure 4. Await completion of permit (BGN 40 + BGN 0.15 for each meter of Cost: None external works, inspections and cable above 100 meters)] issuance of relevant documents Procedure 5. Conclude contract with Agency: EVN Bulgaria Distribution Procedure 5. Await completion of electricity supplier and await electricity Time: 57 days external works, inspections and flow Cost: None issuance of relevant documents Agency: EVN Bulgaria Supply, EVN Bulgaria Agency: Construction firm, construction Distribution Procedure 5. Conclude contract with supervision firm Time: 7 days electricity supplier and await electricity Time: 84 days Cost: None flow Cost: BGN 52,185 [BGN 51,250 material and Agency: EVN Bulgaria Supply, EVN Bulgaria works + BGN 50 fees paid to the Geodesy, GETTING ELECTRICITY Distribution Cartography and Cadastre Agency + BGN 540 Time: 7 days fees to agencies/utilities for their participation in Ruse (Bulgaria) the Commission for Act 16 + BGN 345 fees for Cost: None Name of Utility: Energo-Pro Bulgaria the issuance of Act 16] Data as of: December 31, 2016 Procedure 6. Conclude contract with electricity supplier and await meter Procedure 1. Apply for and await installation and electricity flow preliminary contract Agency: Energo-Pro Grid Agency: CEZ Electro Bulgaria, CEZ Distribution Bulgaria Time: 25 days Time: 7 days Cost: BGN 183 Cost: None 162 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 2. Apply for and await final Procedure 3. Apply for and await final customers with power capacity in the range contract contract of 101-200 kW (based on a connection with Agency: Energo-Pro Grid Agency: CEZ Distribution Bulgaria a length less than 25 meters) + BGN 4,166.25 (without VAT) variable component of the Time: 30 days Time: 30 days connection fee (for every additional meter above Cost: BGN 12,166 [BGN 8,000 (without VAT) Cost: BGN 1,150 25 meters, the customer pays BGN 33.33/ fixed component of the connection fee for meter)] customers with power capacity in the range Procedure 4. Sign guarantee contract of 101-200 kW (based on a connection with for pavement recovery, obtain a length less than 25 meters) + BGN 4,166.25 Procedure 3. Await completion and construction permit and other (without VAT) variable component of the approval of project design, and authorizations from the Municipality connection fee (for every additional meter above issuance of construction permit and Agency: Sofia Municipality, construction 25 meters, the customer pays BGN 33.33/ other authorizations supervision firm meter)] Agency: Energo-Pro Grid, Varna Municipality Time: 49 days Time: 81 days Cost: BGN 972 [BGN 788 present value of lost Procedure 3. Await completion and interest earnings on the guarantee deposit for Cost: None approval of project design, and pavement recovery (BGN 2,600, 0% interests, issuance of construction permit and five-year period) + BGN 30 fee paid to Sofia Procedure 4. Await completion of other authorizations municipality for the approval of the design (BGN external works, inspections and Agency: Energo-Pro Grid, Ruse Municipality 0.1/meter of cable + BGN 15 for the substation) issuance of relevant documents Time: 121 days + BGN 153.75 fee paid to Sofia Municipality for Agency: Energo-Pro Grid Cost: None the issuance of the construction permit (0.3% of Time: 57 days the investment value of the project)] Cost: None Procedure 4. Await completion of Procedure 5. Await completion of external works, inspections and Procedure 5. Conclude contract with external works, inspections and issuance of relevant documents electricity supplier and await electricity issuance of relevant documents Agency: Energo-Pro Grid flow Agency: Construction firm, construction Time: 57 days Agency: Energo-Pro Sales, Energo-Pro Grid supervision firm Cost: None Time: 7 days Time: 84 days Cost: BGN 52,185 [BGN 51,250 material and Cost: None Procedure 5. Conclude contract with works + BGN 50 fees paid to the Geodesy, electricity supplier and await electricity Cartography and Cadastre Agency + BGN 540 flow fees to agencies/utilities for their participation in Source: Doing Business database. the Commission for Act 16 + BGN 345 fees for Note: Additional information on each procedure can be Agency: Energo-Pro Sales, Energo-Pro Grid found at www.doingbusiness.org/EU1. Time: 7 days the issuance of Act 16] Cost: None Procedure 6. Conclude contract with HUNGARY GETTING ELECTRICITY electricity supplier and await meter installation and electricity flow Budapest (Hungary) Sofia (Bulgaria) Agency: CEZ Electro Bulgaria, CEZ Distribution Name of Utility: ELMŰ Hálózati Kft. Name of Utility: CEZ Bulgaria Bulgaria Data as of: December 31, 2016 Data as of: December 31, 2016 Time: 7 days Cost: None Procedure 1. Submit application for Procedure 1. Apply for and await grid connection to ELMŰ Hálózati Kft. preliminary contract GETTING ELECTRICITY and await estimate Agency: CEZ Distribution Bulgaria Varna (Bulgaria) Agency: ELMŰ Hálózati Kft. Time: 25 days Time: 25 days Cost: BGN 212 Name of Utility: Energo-Pro Bulgaria Cost: None Data as of: December 31, 2016 Procedure 2. Await completion and Procedure 2. Obtain external approval of project design Procedure 1. Apply for and await connection works by ELMŰ Hálózati Kft. Agency: Electrical design firm, construction preliminary contract Agency: ELMŰ Hálózati Kft. supervision firm Agency: Energo-Pro Grid Time: 224 days Time: 67 days Time: 25 days Cost: HUF 3,094,800 [HUF 2,044,800 Cost: BGN 5,800 [BGN 2,400 preparation of the Cost: BGN 183 connection fee ((3-phase * 200 amperes) - (32 design + BGN 3,000 fee paid to the construction amperes given for free) * HUF 3,600) + HUF supervision company for the whole process (i.e. Procedure 2. Apply for and await final 1,050,000 public cable network fee ((150 until issuance of the Act 16) + BGN 400 fees contract meters - 25 meters given for free) * HUF paid to other agencies/utilities for their approval 8,400)] Agency: Energo-Pro Grid of the design. The fee paid to CEZ Distribution for the approval of the design is included in the Time: 30 days BGN 1,150 paid as part of procedure 3.] Cost: BGN 12,166 [BGN 8,000 (without VAT) fixed component of the connection fee for INDICATOR DETAILS - GETTING ELECTRICITY 163 Procedure 3*. Request and obtain a Procedure 4*. Request and obtain a Procedure 5. Sign contract to obtain permit to install the cables within the statement on the agreement to provide meter installation: final connection and meter box from the utility electricity from a supplier electricity flow Agency: Measurement Technology and Meter Agency: Licensed electricity supplier Agency: E.ON Észak-dunántúli Áramhálózati Zrt. Controlling Department, ELMŰ Hálózati Kft. Time: 12 days Time: 12 days Time: 16 days Cost: None Cost: None Cost: None Procedure 5. Sign contract to obtain GETTING ELECTRICITY Procedure 4*. Request and obtain a meter installation: final connection and Miskolc (Hungary) statement on the agreement to provide electricity flow electricity from a supplier Agency: E.ON Tiszántúli Áramhálózati Zrt. Name of Utility: ÉMÁSZ Áramszolgáltató Nyrt. Agency: Licensed electricity supplier Data as of: December 31, 2016 Time: 12 days Time: 3 days Cost: None Cost: None Procedure 1. Submit application GETTING ELECTRICITY for grid connection to ÉMÁSZ Procedure 5. Sign contract to obtain Áramszolgáltató Nyrt. and await Gyor (Hungary) estimate meter installation: final connection and electricity flow Name of Utility: E.ON Észak-dunántúli Agency: ÉMÁSZ Áramszolgáltató Nyrt. Agency: ELMŰ Hálózati Kft. Áramhálózati Zrt. Time: 15 days Time: 8 days Data as of: December 31, 2016 Cost: None Cost: None Procedure 1. Submit application Procedure 2. Obtain external GETTING ELECTRICITY for grid connection to E.ON Észak- connection works by ÉMÁSZ dunántúli Áramhálózati Zrt. and await Áramszolgáltató Nyrt. Debrecen (Hungary) estimate Agency: ÉMÁSZ Áramszolgáltató Nyrt. Name of Utility: E.ON Tiszántúli Áramhálózati Zrt. Agency: E.ON Észak-dunántúli Áramhálózati Zrt. Time: 210 days Data as of: December 31, 2016 Time: 15 days Cost: HUF 3,094,800 [HUF 2,044,800 Cost: None connection fee ((3-phase * 200 amperes) - (32 Procedure 1. Submit application amperes given for free) * HUF 3,600) + HUF for grid connection to E.ON Észak- 1,050,000 public cable network fee ((150 Procedure 2. Obtain external meters - 25 meters given for free) * HUF dunántúli Áramhálózati Zrt. and await connection works by E.ON Észak- 8,400)] estimate dunántúli Áramhálózati Zrt. Agency: E.ON Tiszántúli Áramhálózati Zrt. Agency: E.ON Észak-dunántúli Áramhálózati Zrt. Time: 15 days Procedure 3*. Request and obtain a Time: 250 days Cost: None permit to install the cables within the Cost: HUF 3,094,800 [HUF 2,044,800 connection fee ((3-phase * 200 amperes) - (32 meter box from the utility amperes given for free) * HUF 3,600) + HUF Agency: Measurement Technology and Procedure 2. Obtain external Meter Controlling Department, ÉMÁSZ 1,050,000 public cable network fee ((150 connection works by E.ON Tiszántúli Áramszolgáltató Nyrt. meters - 25 meters given for free) * HUF Áramhálózati Zrt. Time: 15 days 8,400)] Agency: E.ON Tiszántúli Áramhálózati Zrt. Cost: None Time: 220 days Procedure 3*. Request and obtain a Cost: HUF 3,094,800 [HUF 2,044,800 statement on the agreement to provide Procedure 4*. Request and obtain a connection fee ((3-phase * 200 amperes) - (32 amperes given for free) * HUF 3,600) + HUF electricity from a supplier statement on the agreement to provide 1,050,000 public cable network fee ((150 Agency: Licensed electricity supplier electricity from a supplier meters - 25 meters given for free) * HUF Time: 14 days Agency: Licensed electricity supplier 8,400)] Cost: None Time: 11 days Cost: None Procedure 3*. Request and obtain a Procedure 4*. Request and obtain a permit to install the cables within the permit to install the cables within the Procedure 5. Sign contract to obtain meter box from the utility meter box from the utility meter installation: final connection and Agency: Measurement Technology and Meter Agency: Measurement Technology and Meter electricity flow Controlling Department, E.ON Tiszántúli Controlling Department, E.ON Észak-dunántúli Agency: ÉMÁSZ Áramszolgáltató Nyrt. Áramhálózati Zrt. Áramhálózati Zrt. Time: 8 days Time: 14 days Time: 11 days Cost: None Cost: None Cost: None *Simultaneous with previous procedure 164 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA GETTING ELECTRICITY Procedure 2. Obtain external Procedure 3*. Request and obtain a Pecs (Hungary) connection works by EDF DÉMÁSZ permit to install the cables within the Hálózati Elosztó Kft. meter box from the utility Name of Utility: E.ON Dél-dunántúli Áramhálózati Agency: EDF DÉMÁSZ Hálózati Elosztó Kft. Agency: Measurement Technology and Meter Zrt. Time: 210 days Controlling Department, E.ON Észak-dunántúli Data as of: December 31, 2016 Cost: HUF 3,094,800 [HUF 2,044,800 Áramhálózati Zrt. connection fee ((3-phase * 200 amperes) - (32 Time: 15 days Procedure 1. Submit application for amperes given for free) * HUF 3,600) + HUF Cost: None grid connection to E.ON Dél-dunántúli 1,050,000 public cable network fee ((150 Áramhálózati Zrt. and await estimate meters - 25 meters given for free) * HUF Procedure 4*. Request and obtain a 8,400)] Agency: E.ON Dél-dunántúli Áramhálózati Zrt. statement on the agreement to provide Time: 15 days electricity from a supplier Cost: None Procedure 3*. Request and obtain a Agency: Licensed electricity supplier permit to install the cables within the Time: 8 days Procedure 2. Obtain external meter box from the utility Cost: None connection works by E.ON Dél- Agency: Measurement Technology and Meter Controlling Department, EDF DÉMÁSZ Hálózati dunántúli Áramhálózati Zrt. Procedure 5. Sign contract to obtain Elosztó Kft. Agency: E.ON Dél-dunántúli Áramhálózati Zrt. Time: 15 days meter installation: final connection and Time: 203 days Cost: None electricity flow Cost: HUF 3,094,800 [HUF 2,044,800 Agency: E.ON Észak-dunántúli Áramhálózati Zrt. connection fee ((3-phase * 200 amperes) - (32 Time: 12 days amperes given for free) * HUF 3,600) + HUF Procedure 4*. Request and obtain a Cost: None 1,050,000 public cable network fee ((150 statement on the agreement to provide meters - 25 meters given for free) * HUF electricity from a supplier 8,400)] Agency: Licensed electricity supplier Source: Doing Business database. Time: 13 days Note: Additional information on each procedure can be found at www.doingbusiness.org/EU1. Procedure 3*. Request and obtain a Cost: None statement on the agreement to provide electricity from a supplier Procedure 5. Sign contract to obtain ROMANIA Agency: Licensed electricity supplier meter installation: final connection and Time: 15 days electricity flow Brasov (Romania) Cost: None Agency: EDF DÉMÁSZ Hálózati Elosztó Kft. Name of Utility: FDEE Transilvania Sud Time: 14 days Data as of: December 31, 2016 Procedure 4*. Request and obtain a Cost: None permit to install the cables within the Procedure 1. Submit application with meter box from the utility GETTING ELECTRICITY Electrica Distribuție Transilvania Sud Agency: Measurement Technology and Meter Szekesfehervar (Hungary) and await for the technical connection Controlling Department, E.ON Dél-dunántúli approval Áramhálózati Zrt. Name of Utility: E.ON Észak-dunántúli Agency: Electrica Distribuție Transilvania Sud Time: 12 days Áramhálózati Zrt. Data as of: December 31, 2016 Time: 30 days Cost: None Cost: RON 215 Procedure 5. Sign contract to obtain Procedure 1. Submit application for grid connection to E.ON Észak- Procedure 2*. Receive site inspection meter installation: final connection and dunántúli Áramhálózati Zrt. and await by utility electricity flow estimate Agency: Electrica Distribuție Transilvania Sud Agency: E.ON Dél-dunántúli Áramhálózati Zrt. Agency: E.ON Észak-dunántúli Áramhálózati Zrt. Time: 1 day Time: 12 days Time: 15 days Cost: None Cost: None Cost: None GETTING ELECTRICITY Procedure 3. Sign a declaration of Procedure 2. Obtain external easement in front of a notary Szeged (Hungary) Agency: Notary connection works by E.ON Észak- Name of Utility: EDF DÉMÁSZ Hálózati Elosztó Kft. dunántúli Áramhálózati Zrt. Time: 1 day Data as of: December 31, 2016 Agency: E.ON Észak-dunántúli Áramhálózati Zrt. Cost: RON 2,140 [RON 2,000 for the easement contract + RON 120 for land registry taxes + Time: 200 days Procedure 1. Submit application RON 20 for a copy of the land registry] Cost: HUF 3,094,800 [HUF 2,044,800 for grid connection to EDF DÉMÁSZ connection fee ((3-phase * 200 amperes) - (32 Hálózati Elosztó Kft. and await amperes given for free) * HUF 3,600) + HUF estimate 1,050,000 public cable network fee ((150 Agency: EDF DÉMÁSZ Hálózati Elosztó Kft. meters - 25 meters given for free) * HUF 8,400)] Time: 14 days Cost: None *Simultaneous with previous procedure INDICATOR DETAILS - GETTING ELECTRICITY 165 Procedure 4. Sign an assignment Procedure 2*. Receive site inspection GETTING ELECTRICITY agreement (direct entrusting request) by utility Cluj-Napoca (Romania) with an electrical contractor certified Agency: e-distribuție Muntenia by ANRE Time: 1 day Name of Utility: FDEE Transilvania Nord Agency: Electrical contractor Cost: None Data as of: December 31, 2016 Time: 1 day Cost: None Procedure 3. Sign a declaration of Procedure 1. Submit application with easement in front of a notary Electrica Distribuţie Transilvania Nord Procedure 5. Submit documents for Agency: Notary and await for the technical connection connection contract and receive Time: 1 day approval contract Cost: RON 80 Agency: Electrica Distribuţie Transilvania Nord Agency: Electrica Distribuție Transilvania Sud Time: 30 days Time: 10 days Cost: RON 215 Procedure 4. Submit documents for Cost: RON 165,072 [RON 7,500 for design connection contract and receive + RON 7,000 for construction permit + RON Procedure 2*. Receive site inspection contract 72 for excavation permit + RON 150,500 for by utility connection works] Agency: e-distribuție Muntenia Time: 10 days Agency: Electrica Distribuţie Transilvania Nord Cost: RON 189,437 [RON 10,723 for design Time: 1 day Procedure 6. Obtain construction + RON 2,813 for construction permit + RON Cost: None permit for connection works 175,902 for the connection works] Agency: Electrical contractor/Municipality Time: 60 days Procedure 3. Sign an easement contract Cost: None Procedure 5. Sign an easement contract in front of a notary and notify the in front of a notary and notify the property easement to the Cadastre and property easement to the Cadastre and Land Registration office Procedure 7. Conclude execution Land Registration office Agency: Notary contract between Electrica Distribuţie Agency: Notary/Cadastre and Land Registration Time: 1 day Transilvania Sud and the electrical office Cost: RON 2,140 [RON 2,000 for the easement contractor and await connection works Time: 1 day contract + RON 120 for land registry taxes + Agency: Electrical contractor/Municipality RON 20 for a copy of the land registry] Cost: RON 2,140 [RON 2,000 for the easement Time: 60 days contract + RON 120 for land registry taxes + Cost: None RON 20 for a copy of the land registry] Procedure 4. Sign an assignment agreement (direct entrusting request) Procedure 8. Receive final inspection Procedure 6. Obtain construction with an electrical contractor certified by Electrica Distribuţie Transilvania Sud, permit for connection works by ANRE submit internal wiring file and receive Agency: Electrical contractor/Municipality Agency: Electrical contractor connection certificate Time: 30 days Time: 1 day Agency: Electrica Distribuție Transilvania Sud Cost: None Cost: None Time: 17 days Cost: None Procedure 7. Conclude execution Procedure 5. Submit documents for contract between e-distribuție connection contract and receive Procedure 9. Sign supply contract and Muntenia and the electrical contractor, contract receive meter installation by Electrica await connection works, and submit Agency: Electrica Distribuţie Transilvania Nord Distribuţie Transilvania Sud internal wiring file Time: 25 days Agency: Energy supplier/Electrica Distribuţie Agency: Electrical contractor/Municipality Cost: RON 164,000 [RON 11,000 for design Transilvania Sud Time: 90 days + RON 3,000 for construction permit + RON Time: 2 days Cost: None 150,000 for connection works] Cost: None Procedure 8. Receive final inspection Procedure 6. Obtain construction GETTING ELECTRICITY permit for connection works by e-distribuţie Muntenia and receive Bucharest (Romania) connection certificate Agency: Electrical contractor/Municipality Agency: e-distribuție Muntenia Time: 60 days Name of Utility: e-distribuție Muntenia Time: 10 days Cost: None Data as of: December 31, 2016 Cost: None Procedure 1. Submit application Procedure 7. Await connection works with e-distribuţie Muntenia, await a Procedure 9. Sign supply contract Agency: Electrical contractor/Municipality proposal study, a study solution and and receive meter installation by Time: 60 days technical connection approval e-distribuţie Muntenia Cost: None Agency: e-distribuție Muntenia Agency: e-distribuție Muntenia Time: 30 days Time: 2 days Cost: RON 215 Cost: None *Simultaneous with previous procedure 166 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 8. Receive final inspection by Procedure 6. Obtain construction Procedure 4. Submit documents for Electrica Distribuţie Transilvania Nord, permit for connection works connection contract and sign contract submit internal wiring file and receive Agency: Electrical Contractor/Municipality Agency: CEZ Distribuție connection certificate Time: 90 days Time: 10 days Agency: Electrica Distribuţie Transilvania Nord Cost: None Cost: RON 177,100 [RON 12,000 for design Time: 20 days + RON 2,500 for construction permit + RON Cost: None Procedure 7. Conclude execution 600 for excavation permit + RON 162,000 for connection works] contract between e-distribuţie Procedure 9. Sign supply contract and Dobrogea and the electrical contractor, receive meter installation by Electrica await connection works, and submit Procedure 5. Sign an easement contract Distribuţie Transilvania Nord internal wiring file in front of a notary and notify the Agency: Energy supplier/Electrica Distribuţie Agency: Electrical contractor property easement to the Cadastre and Transilvania Nord Time: 60 days Land Registration office Time: 5 days Cost: None Agency: Notary Cost: None Time: 1 day Cost: RON 2,140 [RON 2,000 for the easement Procedure 8. Receive final inspection contract + RON 120 for land registry taxes + GETTING ELECTRICITY by e-distribuţie Dobrogea and receive RON 20 for a copy of the land registry] Constanta (Romania) connection certificate Agency: e-distribuție Dobrogea Name of Utility: e-distribuție Dobrogea Procedure 6. Obtain construction Time: 15 days Data as of: December 31, 2016 permit for connection works Cost: None Agency: Electrical Contractor/Municipality Procedure 1. Submit application with Time: 60 days Procedure 9. Sign supply contract e-distribuţie Dobrogea and await for Cost: None and receive meter installation by the technical connection approval e-distribuţie Dobrogea Agency: e-distribuție Dobrogea Procedure 7. Conclude execution Agency: Energy supplier/e-distribuție Dobrogea Time: 30 days contract between CEZ Distribuţie and Time: 2 days Cost: RON 215 the electrical contractor and await Cost: None connection works Procedure 2*. Receive site inspection Agency: Electrical contractor/Municipality GETTING ELECTRICITY by utility Time: 60 days Agency: e-distribuție Dobrogea Craiova (Romania) Cost: None Time: 1 day Name of Utility: CEZ Cost: None Data as of: December 31, 2016 Procedure 8. Receive final inspection by CEZ Distribuţie, submit internal wiring Procedure 3. Sign a declaration of Procedure 1. Submit application with file and receive connection certificate easement in front of a notary CEZ Distribuţie and await for the Agency: CEZ Distribuție Agency: Notary technical connection approval Time: 10 days Time: 1 day Agency: CEZ Distribuție Cost: None Cost: RON 80 Time: 30 days Cost: RON 215 Procedure 9. Sign supply contract Procedure 4. Submit documents for and receive meter installation by CEZ connection contract and receive Procedure 2*. Receive site inspection Distribuţie contract by utility Agency: Energy supplier/CEZ Distribuție Agency: e-distribuție Dobrogea Agency: CEZ Distribuție Time: 5 days Time: 10 days Time: 1 day Cost: None Cost: RON 231,500 [RON 8,000 for design Cost: None + RON 3,500 for construction permit + RON GETTING ELECTRICITY 220,000 for connection works] Procedure 3. Sign a negotiation minute Iasi (Romania) with an electrical contractor certified Procedure 5. Sign an easement contract Name of Utility: Delgaz Grid by ANRE in front of a notary and notify the Data as of: December 31, 2016 Agency: Electrical Contractor property easement to the Cadastre and Time: 1 day Land Registration office Procedure 1. Submit application with Cost: None Agency: Notary/Cadastre and Land Registration Delgaz Grid Distribuţie and await for office the technical connection approval Time: 1 day Agency: Delgaz Grid Cost: RON 2,140 [RON 2,000 for the easement Time: 30 days contract + RON 120 for land registry taxes + Cost: RON 215 RON 20 for a copy of the land registry] *Simultaneous with previous procedure INDICATOR DETAILS - GETTING ELECTRICITY 167 Procedure 2*. Receive site inspection GETTING ELECTRICITY Procedure 8. Receive final inspection by by utility Oradea (Romania) Electrica Distribuţie Transilvania Nord, Agency: Delgaz Grid submit internal wiring file and receive Time: 1 day Name of Utility: FDEE Transilvania Nord connection certificate Cost: None Data as of: December 31, 2016 Agency: Electrica Distribuţie Transilvania Nord Time: 20 days Procedure 3. Submit documents for Procedure 1. Submit application with Cost: None connection contract and receive Electrica Distribuţie Transilvania Nord contract and await for the technical connection Procedure 9. Sign supply contract and Agency: Delgaz Grid approval receive meter installation by Electrica Time: 10 days Agency: Electrica Distribuţie Transilvania Nord Distribuţie Transilvania Nord Cost: RON 160,500 [RON 8,000 for design Time: 30 days Agency: Energy supplier/Electrica Distribuţie + RON 2,500 for construction permit + RON Cost: RON 215 Transilvania Nord 150,000 for connection works] Time: 2 days Procedure 2*. Receive site inspection Cost: None Procedure 4. Sign an easement contract by utility in front of a notary and notify the Agency: Electrica Distribuţie Transilvania Nord GETTING ELECTRICITY property easement to the Cadastre and Time: 1 day Ploiesti (Romania) Land Registration office Cost: None Agency: Notary Name of Utility: FDEE Muntenia Nord Time: 1 day Procedure 3. Sign an easement contract Data as of: December 31, 2016 Cost: RON 2,140 [RON 2,000 for the easement in front of a notary and notify the contract + RON 120 for land registry taxes + property easement to the Cadastre and Procedure 1. Submit application with RON 20 for a copy of the land registry] Land Registration office Electrica Distribuţie Muntenia Nord Agency: Notary and await for the technical connection Procedure 5. Obtain construction Time: 1 day approval permit for connection works Cost: RON 2,140 [RON 2,000 for the easement Agency: Electrica Distribuție Muntenia Nord Agency: Electrical Contractor/Municipality contract + RON 120 for land registry taxes + Time: 30 days Time: 60 days RON 20 for a copy of the land registry] Cost: RON 215 Cost: None Procedure 4. Sign an assignment Procedure 2*. Receive site inspection Procedure 6. Get approval for the agreement (direct entrusting request) by utility timetable for works execution and with an electrical contractor certified Agency: Electrica Distribuție Muntenia Nord await connection works by ANRE Time: 1 day Agency: Electrical Contractor/Municipality Agency: Electrical contractor Cost: None Time: 52 days Time: 1 day Cost: None Cost: None Procedure 3. Sign an easement contract in front of a notary and notify the Procedure 7. Receive final inspection by Procedure 5. Submit documents for property easement to the Cadastre and Delgaz Grid Distribuţie, submit internal connection contract and receive Land Registration office wiring file and receive connection contract Agency: Notary certificate Agency: Electrica Distribuție Transilvania Nord Time: 1 day Agency: Delgaz Grid Distribuție Time: 25 days Cost: RON 2,140 [RON 2,000 for the easement Time: 10 days Cost: RON 157,304 [RON 5,000 for design contract + RON 120 for land registry taxes + Cost: None + RON 2,200 for construction permit + RON RON 20 for a copy of the land registry] 104 for excavation permit + RON 150,000 for connection works] Procedure 4. Sign an assignment Procedure 8. Sign supply contract and receive meter installation by Delgaz agreement (direct entrusting request) Grid Distribuţie Procedure 6. Obtain construction with an electrical contractor certified Agency: Energy supplier/Delgaz Grid Distribuție permit for connection works by ANRE Time: 10 days Agency: Electrical contractor/Municipality Agency: Electrical contractor Cost: None Time: 60 days Time: 1 day Cost: None Cost: None Procedure 7. Await connection works Agency: Electrical contractor/Municipality Time: 60 days Cost: None *Simultaneous with previous procedure 168 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Procedure 5. Submit documents for Procedure 3. Sign a declaration of connection contract and receive easement in front of a notary contract Agency: Notary Agency: Electrica Distribuție Muntenia Nord Time: 1 day Time: 10 days Cost: RON 80 Cost: RON 146,400 [RON 13,500 for design + RON 2,800 for construction permit + RON 100 Procedure 4. Submit documents for for excavation permit + 130,000 for connection connection contract and receive works] contract Agency: e-distribuție Banat Procedure 6. Obtain construction Time: 10 days permit for connection works Cost: RON 191,750 [RON 9,000 for design Agency: Electrical Contractor/Municipality + RON 2,500 for construction permit + RON Time: 60 days 250 for excavation permit + RON 180,000 for Cost: None connection works] Procedure 7. Conclude execution Procedure 5. Sign an easement contract contract between Electrica Distribuţie in front of a notary and notify the Muntenia Nord and the electrical property easement to the Cadastre and contractor and await connection works Land Registration office Agency: Electrical contractor/Municipality Agency: Notary/Cadastre and Land Registration Time: 90 days office Cost: None Time: 1 day Cost: RON 2,140 [RON 2,000 for the easement Procedure 8. Receive final inspection contract + RON 120 for land registry taxes + RON 20 for a copy of the land registry] by Electrica Distribuţie Muntenia Nord, submit internal wiring file and receive connection certificate Procedure 6. Obtain construction Agency: Electrica Distribuție Muntenia Nord permit for connection works Time: 10 days Agency: Electrical Contractor/Municipality Cost: None Time: 60 days Cost: None Procedure 9. Sign supply contract and receive meter installation by Electrica Procedure 7. Conclude execution Distribuţie Muntenia Nord contract between e-distribuţie Banat Agency: Electrica Distribuție Muntenia Nord and the electrical contractor, await Time: 2 days connection works, and submit internal Cost: None wiring file Agency: Electrical Contractor/Municipality GETTING ELECTRICITY Time: 120 days Cost: None Timisoara (Romania) Name of Utility: e-distribuție Banat Procedure 8. Receive final inspection Data as of: December 31, 2016 by e-distribuţie Banat and receive connection certificate Procedure 1. Submit application with Agency: e-distribuție Banat e-distribuţie Banat and await for the Time: 10 days technical connection approval Cost: None Agency: e-distribuție Banat Time: 30 days Procedure 9. Sign supply contract Cost: RON 215 and receive meter installation by e-distribuţie Banat Procedure 2*. Receive site inspection Agency: Energy supplier/e-distribuție Banat by utility Time: 2 days Agency: e-distribuție Banat Cost: None Time: 1 day Cost: None Source: Doing Business database. Note: Additional information on each procedure can be found at www.doingbusiness.org/EU1. *Simultaneous with previous procedure INDICATOR DETAILS - GETTING ELECTRICITY 169 GETTING ELECTRICITY - RELIABILITY OF SUPPLY AND TRANSPARENCY OF TARIFFS INDEX BULGARIA HUNGARY ROMANIA Reliability of supply and transparency of tariffs index 7 (Burgas, Plovdiv) 8 (Szeged) 7 (6 cities) (0–8) 6 (Pleven, Sofia) 7 (5 cities) 6 (Brasov, 4 (Ruse, Varna) 6 (Miskolc) Ploiesti, Timisoara) Total duration and frequency of outages per customer a 2 (Burgas, Plovdiv) 3 (Szeged) 2 (6 cities) year (0–3) 1 (4 cities) 2 (5 cities) 1 (Brasov, Ploiesti, 1 (Miskolc) Timisoara) System average interruption duration index (SAIDI) 2.63 (Burgas, Plovdiv) 0.65 (Szeged) 1.22 (Oradea) 5.51 (Varna) 1.27 (Szekesfehervar) 1.54 (Cluj-Napoca) 6.29 (Pleven, Sofia) 2.66 (Gyor) 3.07 (Constanta) 11.07 (Ruse) 3.12 (Budapest) 3.32 (Bucharest) 3.24 (Pecs) 3.69 (Craiova) 3.63 (Debrecen) 3.73 (Iasi) 5.50 (Miskolc) 4.15 (Brasov) 4.83 (Timisoara) 8.26 (Ploiesti) System average interruption frequency index (SAIFI) 1.12 (Burgas, Plovdiv) 0.42 (Szeged) 0.89 (Oradea) 3.68 (Varna) 0.60 (Szekesfehervar) 0.97 (Cluj-Napoca) 4.12 (Pleven, Sofia) 1.01 (Gyor) 2.53 (Ploiesti) 6.43 (Ruse) 1.03 (Debrecen) 2.86 (Craiova) 1.43 (Budapest) 3.13 (Constanta) 1.46 (Pecs) 3.48 (Bucharest) 2.23 (Miskolc) 3.94 (Iasi) 4.22 (Brasov) 5.12 (Timisoara) Mechanisms for monitoring outages (0–1) 1 (4 cities) 1 1 0 (Ruse, Varna) Does the distribution utility use automated tools to monitor Yes (4 cities) Yes Yes outages? No (Ruse, Varna) Mechanisms for restoring service (0–1) 1 (4 cities) 1 1 0 (Ruse, Varna) Does the distribution utility use automated tools to restore Yes (4 cities) Yes Yes service? No (Ruse, Varna) Regulatory monitoring (0–1) 1 1 1 Does a regulator—that is, an entity separate from the utility Yes Yes Yes —monitor the utility’s performance on reliability of supply? Financial deterrents aimed at limiting outages (0–1) 1 1 1 Does the utility either pay compensation to customers or face Yes Yes Yes fines by the regulator (or both) if outages exceed a certain cap? Communication of tariffs and tariff changes (0–1) 1 1 1 Are effective tariffs available online? Yes Yes Yes Are customers notified of a change in tariff ahead of the Yes Yes Yes billing cycle? Source: Doing Business database. 170 REGISTERING PROPERTY IN BULGARIA - PROCEDURES REQUIRED TO REGISTER A PROPERTY, BY CITY Property value: BGN 576,682 (US$361,000) Data as of: December 31, 2016 Burgas Pleven Plovdiv Ruse Sofia Varna Comments 1. Obtain a tax clearance certificate from the Time (days) 7 7 7 7 7 7 The tax clearance certificate, showing that no taxes are owned, National Revenue Agency office is obtained from the local office of the National Revenue Agency. Cost (BGN) no cost no cost no cost no cost no cost no cost 2. Obtain a tax valuation of the property from Time (days) 3 2* 2* 3* 3* 3* All municipalities offer fast-track procedures for this service at the municipality an additional cost. Cost (BGN) 30 25 30 20 34 40 3. Obtain a nonencumbrance certificate from the Time (days) 3* 3* 3 3* 3* 3* The Property Register offers fast-track service for an additional Property Register cost: BGN 20 for regular service (BGN 10 for each certificate, one for land and another one for building), BGN 60 for fast Cost (BGN) 60 60 60 60 60 60 service (BGN 30 for each certificate, one for land and another one for building). 4. Obtain a sketch of the estate from the local Time (days) 1* 1* 1* 1* 1* 1* The GCCA offers fast-track and express service for an additional office of the Geodesy, Cartography and Cadastre cost: regular procedure costs BGN 30 for land plot + BGN 10 Agency (GCCA) for building; fast 24-hour procedure costs BGN 45 for land plot Cost (BGN) 120 120 120 120 120 120 + BGN 15 for building; and express 4-hour procedure costs BGN 90 for land plot + BGN 30 for building. 5. Obtain certificates of good standing for the Time (days) 0.5* 0.5* 0.5* 0.5* 0.5* 0.5* The cerfiticate can be obtained online at a cost of BGN 8: BGN seller and buyer from the Commercial Register 2.5 for the first page and BGN 1.5 for each consequent page (2 pages for each certificate costing BGN 4 for the buyer's Cost (BGN) 8 8 8 8 8 8 certificate and BGN 4 for the seller's certificate). 6. Have a notary execute the transfer deed Time (days) 1 1 1 1 1 1 The notary fees for properties above BGN 500,000 are BGN 1530.5+0.1% of property value above BGN 500,000 not to exceed BGN 6,000. This procedure includes the cost of property transfer tax, which is 2.2% of the property value in Ruse, 2.5% Cost (BGN) 16,601 18,619 16,601 14,871 16,601 19,484 in Burgas, Plovdiv and Sofia, 2.85% in Pleven and 3% in Varna. It also includes a registration fee of 0.1% of the property value. 7. Register the notarized deed with the Property Time (days) 1 2 4 2 10 2 The notary will register the notarized deed at the Property Register Register office of the local court. The notary will pay the DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA registration fees and property transfer tax collected in Cost (BGN) no cost no cost no cost no cost no cost no cost procedure 6. 8. Register the new owner for taxes with the Time (days) 1 1 1 1 1 1 According to Article 14 of the Law on Local Taxes and Fees, for municipal tax department any newly acquired property, the owner is obliged to submit a tax declaration to the municipal authorities where the property Cost (BGN) no cost no cost no cost no cost no cost no cost is located. The owner must attach a copy of his ownership title (notary deed) to the declaration. Source: Doing Business database. *Takes place simultaneously with another procedure. Note: The order for procedures 2, 3 and 4 is different for Burgas and Plovdiv. In Burgas one needs to obtain a sketch of the estate before obtaining tax valuation of the property. In Plovdiv, the sketch is obtained after the tax valuation of the property, but before obtaining a nonencumbrance certificate from the local office of the Property Register. REGISTERING PROPERTY IN HUNGARY - PROCEDURES REQUIRED TO REGISTER A PROPERTY, BY CITY Property value: HUF 164,816,344 (US$ 649,500) Data as of: December 31, 2016 Budapest Debrecen Gyor Miskolc Pecs Szeged Szekesfehervar Comments 1. Obtain a certified title record Time (days) 0.5 0.5 0.5 0.5 0.5 0.5 0.5 The certified title sheet is needed in order to check from Foldhivatal (Land Registry) the current data of the property. The cost is HUF 6,250 for hard copy certificate, HUF 3,600 for electronic certificate, and HUF 1,000 for uncertified Cost (HUF) 3,600 3,600 3,600 3,600 3,600 3,600 3,600 sheet. 2. Get the sale and purchase Time (days) 1 1 1 1 1 1 1 The contract becomes valid by the countersignature agreement signed by a lawyer of a lawyer (signature, stamp and dry stamp on each page), the use of which is mandatory. Lawyer fees are on average 1% of the property value. Cost (HUF) 1,648,163 1,648,163 1,648,163 1,648,163 1,648,163 1,648,163 1,648,163 3. Obtain a copy of the buyer’s Time (days) 1 1 1 1 1 1 1 An extract of the purchaser company from the certificate of incorporation from commercial registry must be obtained. The extract the Court of Registration (as well as the specimen of signature) is to be filed with regard to the seller of the property as well. Cost (HUF) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 4. Register the title with Time (days) 15 6 9 8 16 9 8 The cost for this procedure includes HUF 16,600 Foldhivatal (Land Registry) (registration fee of HUF 6,600 and expedited procedure fee of HUF 10,000) and 4% of property value for stamp duty. Cost (HUF) 6,609,254 6,609,254 6,609,254 6,609,254 6,609,254 6,609,254 6,609,254 Source: Doing Business database. INDICATOR DETAILS - REGISTERING PROPERTY 171 172 REGISTERING PROPERTY IN ROMANIA - PROCEDURES REQUIRED TO REGISTER A PROPERTY, BY CITY Property value: RON 1,755,459 (US$ 475,000) Data as of: December 31, 2016 Brasov Bucharest Cluj-Napoca Constanta Craiova Iasi Oradea Ploiesti Timisoara Comments 1. Obtain cadastral information Time (days) 8 8 8 8 8 8 8 8 8 The documents to be submitted include: from the cadastre division of the 1) standard application form, 2) a copy of National Agency for Cadastre the ownership title, and 3) a copy of the and Land Registration (NACLR) identification documents of the seller. Cost (RON) 160 160 160 160 160 160 160 160 160 2. Obtain a fiscal certificate from Time (days) 2* 4* 1* 1* 1* 1* 1* 1* 2* The seller obtains a clearance certificate from the the municipal tax department tax department of the municipality where the real estate is located attesting that the property is not owned by someone else and that there Cost (RON) no cost no cost 4 27 no cost 20 25 115 no cost are no unpaid taxes. 3. Obtain the land book extract Time (days) 2 2 2 2 2 2 2 2 2 NACLR offers an expedited procedure for this (nonencumbrance certificate) service at an additional cost. The cost for regular from the NACLR's land office procedure is RON 40, while the cost for an division expedited procedure is RON 200. Cost (RON) 200 200 200 200 200 200 200 200 200 4. Have a notary authenticate Time (days) 2 2 2 2 2 2 2 2 2 The notary fees for transactions with values the transfer deed above RON 600,001 (without VAT) are RON 5,080 + 0.44% of the transaction value exceeding RON 600,001. Cost (RON) 10,164 10,164 10,164 10,164 10,164 10,164 10,164 10,164 10,164 5. Register the title with the Time (days) 3 3 3 3 3 3 3 3 3 NACLR offers an expedited procedure for this NACLR service. The cost for regular procedure is 0.5% of the property value. The cost for an expedited procedure is 0.5% of the property value + extra fee of 4 times 0.5% of the property value. The Cost (RON) 13,777 13,777 13,777 13,777 13,777 13,777 13,777 13,777 13,777 minimum cost is RON 60 and the extra fee paid for the expedited procedure cannot exceed RON 5,000. DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA 6. File a fiscal declaration Time (days) 1 1 1 1 1 1 1 1 1 The fiscal declaration concerning the immovable confirming the acquisition of the property acquisition should be filled in by the property with the municipal tax purchaser at the local tax department within department a 30 day from the notarization of the transfer Cost (RON) no cost no cost no cost no cost no cost no cost no cost no cost no cost deed. Source: Doing Business database. *Tak0es place simultaneously with another procedure. REGISTERING PROPERTY - QUALITY OF LAND ADMINISTRATION INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score Quality of land administration index (0–30) 20 (4 cities) 26 18 (Oradea) 19 (Plovdiv and 17 (7 cities) Sofia) 16 (Cluj-Napoca) Reliability of infrastructure index (0–8) 6 8 6 (Oradea) 5 (7 cities) 4 (Cluj-Napoca) In what format are the majority of title or deed records Computer/Scanned 1 Computer/Fully digital 2 Computer/Fully digital 2 (8 cities) kept in the largest business city—in a paper format or in (8 cities) 0 (Cluj-Napoca) a computerized format (scanned or fully digital)? (0–2) Paper (Cluj-Napoca) Is there an electronic database for checking for Yes 1 Yes 1 No 0 encumbrances (liens, mortgages, restrictions and the like)? (0–1) In what format are the majority of maps of land plots kept Computer/Scanned 1 Computer/Fully digital 2 Computer/Scanned 1 (Cluj-Napoca and in the largest business city—in a paper format or in a (Cluj-Napoca and Oradea) Oradea) computerized format (scanned or fully digital)? (0–2) Paper (7 cities) 0 (7 cities) Is there an electronic database for recording boundaries, Yes 1 Yes 1 Yes 1 checking plans and providing cadastral information (geographic information system)? (0–1) Is the information recorded by the immovable property Different databases but 1 Different databases but 1 Single database 1 registration agency and the cadastral or mapping agency linked linked kept in a single database, in different but linked databases or in separate databases? (0–1) Do the immovable property registration agency and Yes 1 Yes 1 Yes 1 cadastral or mapping agency use the same identification number for properties? (0–1) Transparency of information index (0–6) 4 3.5 6 Who is able to obtain information on land ownership at Anyone who pays the 1 Anyone who pays the 1 Anyone who pays the 1 the agency in charge of immovable property registration official fee official fee official fee in the largest business city? (0–1) Is the list of documents that are required to complete any Yes, online 0.5 Yes, online 0.5 Yes, online 0.5 type of property transaction made publicly available–and if so, how? (0–0.5) Is the applicable fee schedule for any property transaction Yes, online 0.5 Yes, online 0.5 Yes, online 0.5 at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how? (0–0.5) INDICATOR DETAILS - REGISTERING PROPERTY 173 174 REGISTERING PROPERTY - QUALITY OF LAND ADMINISTRATION INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score Does the agency in charge of immovable property Yes, online 0.5 Yes, online 0.5 Yes, online 0.5 registration commit to delivering a legally binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? (0–0.5) Is there a specific and separate mechanism for filing No 0 No 0 Yes 1 complaints about a problem that occurred at the agency in charge of immovable property registration? (0–1) Are there publicly available official statistics tracking Yes 0.5 No 0 Yes 0.5 the number of transactions at the immovable property registration agency? (0–0.5) Who is able to consult maps of land plots in the largest Anyone who pays the 0.5 Anyone who pays the 0.5 Anyone who pays the 0.5 business city? (0–0.5) official fee official fee official fee Is the applicable fee schedule for accessing maps of land Yes, online 0.5 Yes, online 0.5 Yes, online 0.5 plots made publicly available—and if so, how? (0–0.5) Does the cadastral or mapping agency commit to No 0 No 0 Yes, online 0.5 delivering an updated map within a specific time frame— and if so, how does it communicate the service standard? (0–0.5) Is there a specific and separate mechanism for filing No 0 No 0 Yes 0.5 complaints about a problem that occurred at the cadastral or mapping agency? (0–0.5) Geographic coverage index (0–8) 4 8 0 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Are all privately held land plots in the economy formally Yes 2 Yes 2 No 0 registered at the immovable property registry? (0–2) Are all privately held land plots in the business city Yes 2 Yes 2 No 0 formally registered at the immovable property registry? (0–2) Are all privately held land plots in the economy mapped? No 0 Yes 2 No 0 (0–2) Are all privately held land plots in the business city No 0 Yes 2 No 0 mapped? (0–2) REGISTERING PROPERTY - QUALITY OF LAND ADMINISTRATION INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score Land dispute resolution index (0–8) 6 (4 cities) 6.5 6 5 (Plovdiv and Sofia) Does the law require that all property sale transactions Yes 1.5 Yes 1.5 Yes 1.5 be registered at the immovable property registry to make them opposable to third parties? (0–1.5) Is the system of immovable property registration subject Yes 0.5 Yes 0.5 Yes 0.5 to a state or private guarantee? (0–0.5) Is there a specific compensation mechanism to cover for No 0 Yes 0.5 No 0 losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? (0–0.5) Does the legal system require a control of legality of the Yes 0.5 Yes 0.5 Yes 0.5 documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)? (0–0.5) Does the legal system require verification of the identity Yes 0.5 Yes 0.5 Yes 0.5 of the parties to a property transaction? (0–0.5) Is there a national database to verify the accuracy of Yes 1 Yes 1 Yes 1 identity documents? (0–1) How long does it take on average to obtain a decision Between 1 and 2 years 2 (4 cities) Between 1 and 2 years 2 Between 1 and 2 years 2 from the first-instance court for such a case (without (4 cities) 1 (Plovdiv and Sofia) appeal)? (0–3) Between 2 and 3 years (Plovdiv and Sofia) Are there any statistics on the number of land disputes in No 0 No 0 No 0 the first instance? (0–0.5) Equal access to property rights index (-2–0) 0 0 0 Do unmarried men and unmarried women have equal Yes 0 Yes 0 Yes 0 ownership rights to property? Do married men and married women have equal Yes 0 Yes 0 Yes 0 ownership rights to property? Source: Doing Business database. INDICATOR DETAILS - REGISTERING PROPERTY 175 176 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA ENFORCING CONTRACTS - TIME AND COST TO RESOLVE A COMMERCIAL DISPUTE, BY CITY Time (days) Cost (% of claim) Filing and Trial and Enforcement Total Attorney Court Enforcement Total City (Country) service judgment of judgment time fees costs costs cost Burgas (Bulgaria) 41 143 177 361 7.1 5.8 3.0 15.9 Pleven (Bulgaria) 43 124 122 289 10.4 5.2 3.0 18.6 Plovdiv (Bulgaria) 70 208 162 440 10.4 5.0 3.0 18.4 Ruse (Bulgaria) 54 127 140 321 10.4 5.6 3.0 19.0 Sofia (Bulgaria) 105 334 125 564 10.0 5.6 3.0 18.6 Varna (Bulgaria) 62 196 137 395 7.9 5.8 3.0 16.7 Budapest (Hungary) 60 365 180 605 5.0 8.0 2.0 15.0 Debrecen (Hungary) 40 200 90 330 5.0 6.8 2.0 13.8 Gyor (Hungary) 60 365 180 605 5.0 6.8 2.0 13.8 Miskolc (Hungary) 40 250 120 410 5.0 6.8 2.0 13.8 Pecs (Hungary) 45 365 90 500 5.0 6.8 2.0 13.8 Szeged (Hungary) 60 300 180 540 5.0 6.8 2.0 13.8 Szekesfehervar (Hungary) 60 245 120 425 5.0 6.8 2.0 13.8 Brasov (Romania) 87 409 193 689 6.0 8.1 7.8 21.9 Bucharest (Romania) 52 365 95 512 7.7 8.1 10.0 25.8 Cluj-Napoca (Romania) 43 314 170 527 7.4 7.1 7.3 21.8 Constanta (Romania) 36 319 140 495 5.7 7.3 6.6 19.6 Craiova (Romania) 49 296 146 491 6.8 6.8 5.8 19.4 Iasi (Romania) 62 307 153 522 5.0 6.7 4.9 16.6 Oradea (Romania) 35 375 139 549 9.0 5.9 3.9 18.8 Ploiesti (Romania) 89 397 167 653 6.2 7.0 7.0 20.2 Timisoara (Romania) 37 288 130 455 6.2 6.9 6.5 19.6 Source: Doing Business database. ENFORCING CONTRACTS - QUALITY OF JUDICIAL PROCESSES INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score Quality of judicial processes index (0–18) 11.5 (Plovdiv, Ruse and 14.0 14.0 (4 cities) Varna) 13.0 (Craiova and Oradea) 10.5 (Sofia) 12.5 (Iasi) 10.0 (Burgas and Pleven) 11.5 (Brasov and Ploiesti) Court structure and proceedings (0–5) 3.5 (4 cities) 4.5 5.0 (6 cities) 2.0 (Burgas and Pleven) 3.5 (Brasov, Iasi and Ploiesti) 1. Is there a court or division of a court dedicated solely to Yes (4 cities) 1.5 (4 cities) Yes 1.5 Yes (6 cities) (6 cities) 1.5 hearing commercial cases? (0–1.5) No (Burgas and Pleven) 0.0 (Burgas and Pleven) No (Brasov, Iasi and Ploiesti) (Brasov, Iasi and Ploiesti) 0.0 2. Small claims court (0–1.5) 0.0 1.5 1.5 2.a. Is there a small claims court or a fast-track No Yes Yes procedure for small claims? 2.b. If yes, is self-representation allowed? N/A Yes Yes 3. Is pretrial attachment available? (0–1) Yes 1.0 Yes 1.0 Yes 1.0 4. Are new cases assigned randomly to judges? (0–1) Yes, automatically 1.0 Yes, but manual 0.5 Yes, automatically 1.0 5. Does a woman's testimony carry the same evidentiary Yes 0.0 Yes 0.0 Yes 0.0 weight in court as a man's? (-1–0) Case management (0–6) 3.5 (5 cities) 4.0 4.0 (5 cities) 2.5 (Sofia) 3.0 (Brasov, Craiova, Oradea and Ploiesti) 1. Time standards (0–1) 1.0 1.0 1.0 1.a. Are there laws setting overall time standards for Yes Yes Yes key court events in a civil case? 1.b. If yes, are the time standards set for at least three Yes Yes Yes court events? 1.c. Are these time standards respected in more than Yes Yes Yes 50% of cases? 2. Adjournments (0–1) 0.5 0.0 0.0 2.a. Does the law regulate the maximum number of No No No adjournments that can be granted? 2.b. Are adjournments limited to unforeseen and Yes No No exceptional circumstances? 2.c. If rules on adjournments exist, are they respected in Yes N/A N/A more than 50% of cases? INDICATOR DETAILS - ENFORCING CONTRACTS 177 178 ENFORCING CONTRACTS - QUALITY OF JUDICIAL PROCESSES INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score 3. Can two of the following four reports be generated Yes 1.0 Yes 1.0 Yes 1.0 about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? (0–1) 4. Is a pretrial conference among the case management No 0.0 No 0.0 No 0.0 techniques used before the competent court? (0–1) 5. Are there any electronic case management tools in place Yes (5 cities) 1.0 (5 cities) Yes 1.0 Yes 1.0 within the competent court for use by judges? (0–1) No (Sofia) 0.0 (Sofia) 6. Are there any electronic case management tools in place No 0.0 Yes 1.0 Yes (5 cities) 1.0 (5 cities) within the competent court for use by lawyers? (0–1) No (Brasov, Craiova, Oradea 0.0 (Brasov, Craiova, Oradea and Ploiesti) and Ploiesti) Court automation (0-4) 2.0 2.5 2.0 1. Can the initial complaint be filed electronically through a No 0.0 Yes 1.0 No 0.0 dedicated platform within the competent court? (0–1) 2. Is it possible to carry out service of process electronically No 0.0 No 0.0 Yes 1.0 for claims filed before the competent court? (0–1) 3. Can court fees be paid electronically within the competent Yes 1.0 Yes 1.0 Yes 1.0 court? (0–1) 4. Publication of judgments (0–1) 1.0 0.5 0.0 4.a. Are judgments rendered in commercial cases at all Yes No No levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the Yes Yes No appellate and supreme court level made available DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0–3) 2.5 3.0 3.0 1. Arbitration (0–1.5) 1.0 1.5 1.5 1.a. Is domestic commercial arbitration governed by Yes Yes Yes a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from Yes No No those that deal with public order or public policy— that cannot be submitted to arbitration? ENFORCING CONTRACTS - QUALITY OF JUDICIAL PROCESSES INDEX (continued) BULGARIA HUNGARY ROMANIA Answer Score Answer Score Answer Score 1.c. Are valid arbitration clauses or agreements usually Yes Yes Yes enforced by the courts? 2. Mediation/Conciliation (0–1.5) 1.5 1.5 1.5 2.a. Is voluntary mediation or conciliation available? Yes Yes Yes 2.b. Are mediation, conciliation or both governed by Yes Yes Yes a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt Yes Yes Yes mediation or conciliation (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Source: Doing Business database. INDICATOR DETAILS - ENFORCING CONTRACTS 179 180 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Acknowledgments Doing Business in the European Union campaign was designed and led by State Inspectorate for Constructions, 2017: Bulgaria, Hungary and Romania Indira Chand in collaboration with and Superior Council of Magistracy of was produced by a team led by Trimor Anna Kowalczyk, Victor Neagu and Romania. Mici, Madalina Papahagi and Pilar Ivelina Todorova Taushanova. The Salgado-Otónel. The team comprised website (http://www.doingbusiness.org Data collection was carried out in col- Razvan Antonescu, Diane Davoine, Lilla /EU1) was developed by Kunal Patel, laboration with: (i) Tsvetkova Bebov Fördős, Dorina Peteva Georgieva, Slavena Kamalesh Sengaonkar, Bishal Raj Thakuri Komarevksi (the team was led by Nikolay Georgieva, Joyce Antone Ibrahim, Márton and Hashim Zia. The report was edited by Bebov and comprised Eleonora Mateina, Kerkapoly, Radka Konstantinova, Alexandra Alison Strong and Luis Liceaga produced Victoria Tzonkova, Venelin Dimitrov, and Mincu, Corina Rebegea, Tommaso Rooms, the layout. Angel Bangachev) and HESPA OOD (the Alexandru Stanescu, Petar Stoykov and team was led by Elisaveta Kokotanova Sylvia Stoynova. The report was prepared The study was funded by the European and comprised Hristina Atanasova and under the direction of Mierta Capaul. Commission, Directorate-General Regional Nonka Kekova) in Bulgaria; (ii) Buildecon and Urban Policy. It was undertaken under (the team was led by János Gaspar and The team is grateful for valuable peer the auspices of the Council of Ministers comprised Eszter Falucskai) and Szecskay review comments provided by colleagues of Bulgaria, the Ministry of National Attorneys at Law (the team was led by from across the World Bank Group. Economy of Hungary, and the Ministry Sándor Nemeth and comprised Ádám Maciej Drozd, Iva Hamel and Silvia Muzi of Regional Development and Public Simon and Adrienn Tar) in Hungary; (iii) reviewed the full text. Experts in each of Administration and Ministry of Economy, Maravela & Asociaţii (the team was led the five areas measured were consulted Commerce and Business Environment by Marius Pătrășcanu, Gelu Maravela when drafting the individual chapters: Relations of Romania. Valuable assis- and Alina Popescu and comprised Ioan Nadia Badea, Karim Belayachi, Erica tance was provided by City Halls across Roman, Mirela Metea, Viorel Bran, Bosio, Klaus Decker, Marie Lily Delion, Bulgaria, Hungary and Romania, which Teodor Chirvase, Sonia Fedorovici, Laura Diniz, Georgia Harley, Frederic hosted meetings between the project Magda Grigore, Alexandra Ichim, Meunier, Aris Molfetas-Lygkiaris, Tigran team and local public officials and magis- Andreea Rusu and Ana Zaporojan), Parvanyan, Victoria Stanley, Claudia Ines trates during the implementation phase. Ordinul Arhitecţilor din Romania (the OAR Vasquez Suarez and Maria Adelaida team was led by Ștefan Ghenciulescu, Velez. The project team extends special thanks Vice-President, and comprised Mariana for the information and assistance Ionescu, Diana Stan, Iulian Țepure, as Arup Banerji, Elisabetta Capannelli, provided throughout the project to: (i) well as the Executive Secretaries of Tony Thompson and Isfandyar Zaman the Ministry of Justice, Registry Agency, the nine OAR branches from the cities Khan provided guidance and leadership. and Geodesy, Cartography and Cadastre benchmarked) and Structural Consulting™ Arabela Aprahamian, Antonio Borges, Agency of Bulgaria; (ii) the Energy and Group (the team was led by Dragoș Jaliu Adela I. Delcheva, Adelina Boyanova Public Utility Regulatory Authority, and Dan Barna—until May 2016—and Dotzinska, Tanta Duta, Corina Grigore, Land Administration Department of the comprised Anca Petrucă, Mirela Săcăluş, Katherine Angela Haynes, Monica Ion, Ministry of Agriculture, National Office of Cristina Pojoga, and Raluca Prelucă) Marcel Ionescu-Heroiu, Anna Karpets, the Judiciary, and Prime Minister’s Office in Romania. The Bulgarian Chamber of Monique Pelloux, Patrizia Poggi, of Hungary; and (iii) the National Trade Private Enforcement Agents, the National Madalina Pruna, Pilar Sanchez-Bella and Registry Office, National Agency for Union of Public Notaries of Romania and Andras Tamas Torkos provided valuable Cadastre and Land Registration, National the National Union of Bailiffs of Romania advice and assistance at various stages Regulatory Authority for Energy, National also contributed valuable feedback and of the project. The communications Agency for Fiscal Administration, data. ACKNOWLEDGMENTS 181 More than 700 business consultants, lawyers, notaries, engineers, electricians, architects, construction experts, util- ity providers, public officials, magistrates and bailiffs contributed to Doing Business in the European Union 2017: Bulgaria, Hungary and Romania. The team would like to express its special gratitude to the national and local public officials and members of the judiciary who participated in the project and who made valuable comments during the consultation and data-review period. The names of those wishing to be acknowledged are listed on the following pages. 182 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA PRIVATE SECTOR Rositsa Krasimirova Ivanova Individual Law Firm Kremena Yordanova Petkova Notary Office Boyan Boyanov Stanilov Ltd. HUNGARY CONTRIBUTORS BUDAPEST Petra Stamenova Nikolay Stefanov Ganchev Angel Bangachev Ka Konsult 04 Ltd. Notary Office Tsvetkova Bebov Komarevski Béla Bánáti BÁNÁTI + HARTVIG BULGARIA Galina Petrova Milka Trifonova Victoria Tzonkova Építész Iroda Kft. Luchezar Energy Ltd. Prommont Ltd. Tsvetkova Bebov Komarevski BURGAS Péter Éles Ilko Penchev Bakalov Dimitar Kirilov Terziev Venelin Dimitrov BÁNÁTI + HARTVIG Bailiff Office PLOVDIV Stankova & Terziev Tzvetkova Bebov Komarevski Építész Iroda Kft. Mariana Georgieva Kirova Kiril Dimitrov Terziev Georgi Stoyanov Vladimirov János Gáspár Maria Filipova Bailiff Office Build Consult 09 Ltd. Stankova & Terziev Vladimirov & Partners BUILDECON Kft. Stefan Dimitrov Gorchev Georgi Genev Sirma Stoyanova Vladimirova Balázs Dr. Janda Stoyan Drajev Bailiff Office Build Consult 09 Ltd. Stroynorm Ltd. Vladimirov & Partners Dr. Janda Balázs Ügyvédi Iroda Stanislav Stoilov Sava Tachev Krum Stanchev Barna Dr. Molnár Georgi Grudov Consulting Engineering Business Incubator Burgas Stroynorm Ltd. Dr. Molnár Barna Ügyvédi Iroda Group - Plovdiv Nikola Marinov Maxim Stoyadinov VARNA Ervin Gombo Kaloyan Momchilov Telekontrol – 99 Ltd. Ruse GMBS Kft. Consulting Engineering Egnatia Ltd. Georgi Georgiev Group - Burgas BEL-RS Ltd. Pavlin Bonchev Noémi Nacsa Alexandar Kobakov Telekontrol – 99 Ltd. Ruse GMBS Kft. Nikolay Dimitrov Elkob Ltd. Kalin Konov Consulting Engineering Consulting Engineering Group - Burgas Ferenc Kalla Tashko Vulchev Group - Varna GTF Kft. SOFIA ELTELKOM Bisser Prodanov Karel Kral Ani Derkrikoryan Elektroizgrajdane EOOD Csanád Sárosi Dimitar Dudekov CEZ Bulgaria EAD Energo Pro Varna Óbuda-Újlak Zrt. Eurobulstroy Holding Ltd. Plovdiv Vassil Gyourdzekliev Ognian Nechev Krasimir Ivanov Energoefekt Control Ltd. Attila Dr. Jákói Ilina Stefanova CEZ Bulgaria EAD Energo Pro Varna Szecskay Ügyvédi Iroda EVN Boyana Ivanova Chilikova Spas Dzhadzharov Nikolay Nikolov Individual Law Firm Ádám Dr. Simon Ivan Ivanov CEZ Bulgaria EAD Energo Pro Varna Szecskay Ügyvédi Iroda EVN Lina Angelova Georgieva Yordanka Nikolova Kovachka Borislav Dunov Individual Law Firm Sándor Dr. Németh Teodora Bogoeva CEZ Bulgaria EAD Individual Law Firm Szecskay Ügyvédi Iroda EVN Milena Stoyanova Zornitsa Genova Ivan Nikolov Angelov Individual Law Firm Atanas Bogomilov Kostov CEZ Bulgaria EAD Individual Law Firm DEBRECEN Individual Law Firm Peshka Hristova Chernokozheva Kalin Konov Kalin Nikolaev Gospodinov Krisztián Szőnyi Individual Law Firm Georgi Veselinov Ganchev Consulting Engineering Group Individual Law Firm CMA International Individual Law Firm Marusya Vlahova Nikolay Nikolov Lyuba Shankova Rousseva Péter Dr. Alexa Ka Konsult 04 Ltd. Konstantin Dimitrov/Maria Consulting Engineering Individual Law Firm Dr. Alexa Péter Ügyvédi Iroda Dimitrova Group - Sofia Kremena Konsulova Individual Law Firm Miglena Zhecheva Zoltán Földesi Notary Office Petar Cheliovski Individual Law Firm Faldon Kft. Teodora Sabeva Filipova Consulting Engineering Milena Koleva Ilcheva Individual Law Firm Group - Sofia Mladen Boyanov Popov Notary Office Individual Law Firm GYOR Elena Agop Sopadzhiyan Stoyan Yanev Bence Dr. Havasi Nadejda Markova Notary Office Consulting Engineering Svetlana Levkova Notary Office Havasi Ügyvédi Iroda Group - Sofia Individual Law Firm Svetlana Giurdjeklieva Ágoston Perger Valentin Dimitrov StroyControl Ivelin Kiosev Stefan Tzanev Sanora Ltd. Burgas Electro-Age Tervező és Electrogetz Ltd. Lupo Engineering Ltd. Marieta Vladimirova Szolgáltató Kft. Svetlana Gyurdzeklieva Telekontrol – 99 Ltd. Plovdiv Vanya Georgieva Konstantinova Petar Stoyanov Petrov Stroy Control Correct Róbert Galambos Individual Law Firm Notary Office Sevdelina Varcheva Elektromentor Kft. Todor Krustev Telekontrol – 99 Ltd. Plovdiv Ilian Petkov Hristo Nikolaev ViK Burgas Éva Dr. Magyarlaki ISPDD Ltd. Pandora Anton Iliev Gulubov Győri 7. számú Ügyvédi Iroda ViK Plovdiv Ivo Alexandrov Diana Ilieva Pál Dr. Baranyay PLEVEN Kambourov & Partners Rutex Ltd. - Varna Dinko Gospodinov Győri 7. számú Ügyvédi Iroda Petyo Angelov Petkov Attorneys at law Bailiff Office ViK Plovdiv Georgi Kiradjiev Judit Pattantyús Radosveta Kojuharova Telekontrol – 99 Ltd. Óbuda-Újlak Zrt. Viktor Liudmilov Stoyanov Kambourov & Partners Bailiff Office RUSE Attorneys at law Kaniu Kanev Sándor Benkei Kalin Konov Telekontrol – 99 Ltd. Óbuda-Újlak Zrt. Slobodan Tanchev Veronika Hadjieva Varna/Sofia/Pleven Consulting Engineering Egnatia Ltd. Kambourov & Partners Péter Lados Group - Ruse Nadia Tzvetkova Georgieva Attorneys at law Talent-Plan Kft. Assen Belichovski Ilian Tsvetkov ViK Varna Eurobulstroy Holding Ltd. Elena Petrova EL Ltd. Nikolai Nikolov Olena 2003 Ltd. Elena Boyanova ViK Varna MISKOLC Kalin Plamenov Minev Regina Dr. Hronszky Eurobulstroy Holding Ltd. Petar Stefanov Human Resources Rutex Ltd. - Sofia Hronszky Ügyvédi Iroda Theodor Gusarev Development Agency Eurobulstroy Holding Ltd. Theodor Stefanov Gábor Dr. Kopasz Dimitar Ivanov Roev Rutex Ltd. - Sofia Kopasz Ügyvédi Iroda Berta Vassileva Yakova Individual Law Firm Individual Law Firm Vladimir Popov Andrea Dr. Kozák Levon Severinov Sanora Ltd. Sofia Kozák Ügyvédi Iroda Nikolay Todorov Yakov Individual Law Firm Individual Law Firm Dimitar Georgiev Valkanov Béla Márton Nikolay Kolishovski Sofia Water Exon 2000 Kft. Kolishovski & Marinov ACKNOWLEDGMENTS 183 József Vincze ROMANIA Andreea Rusu Monica Crețu Elena Ștefănescu, KVADRATÚRA KFT. Maravela & Asociații ENEL Distribution Dobrogea Dinulescu-Colțatu BRASOV Ștefănescu & Cioroianu - SCA Lajos Üszögh Sonia Fedorovic Dan Frangeti MIVÍZ Miskolc Waterworks Ltd. Bogdan Drăghici Maravela & Asociații Frangeti, Popescu & Grigore APEX ELECTRIC VD SRL IASI Viorel Bran Alexandru Haiduc Cornel Toma-Tereacă Maravela & Asociații Individual Law Firm Cătălin Chiriac PECS Bailiff Office Bailiff Office József Horváth Alexandru Mihai Ionas Alexandru-Petru Bau-Consulting Kft. Stelian Emil Dincă Notary Office Lisievici-Brezeanu Cornelia Anchidin Bailiff Office Individual Law Firm Bailiff Office Tamás Dr. Zugfil Lidia Haraga Dr. Zugfil Tamás Ügyvédi Iroda Cristian Stoian Notary Office Lidia Beșe Vladimir Zabolotnăi Brasov Water Company Individual Law Firm Bailiff Office Gábor Hegyi Viorel Luca Hegyi Építész Stúdió Kft. Attila Simon Notary Office Constantin Banita Ioan Ojică Electrica Distribution Notary Office ELECTRIC INSTAL SRL József Borbás Transilvania South Dragos-Mircea Constantin Korrektvill Kft. Office of Architecture George Tragone Romeo Gabor Ioan Dumbravă Notary Office ELECTRIC INSTAL SRL Tamás Perl Electrica Distribution Emilian Grigoriu M Mérnöki Iroda Kft. Transilvania South Office of Architecture Luana Banita Manuela Earmacov Notary Office EON Distribution Zsuzsanna Dr. Schvertfőgel Mariana Tazlaoanu Lucian Parvulescu SCHVERTFŐGEL és Electrica Distribution Office of Architecture Mariana Iosif Alexandra Mihaela Mihai Társa Ügyvédi Iroda Transylvania South Notary Office Individual Law Firm Marie Jeanne Stefanescu Zoltán Liszt Horațiu Marin Office of Architecture Adnan Memet Lucian Cosmin Mihai Techniq 2000 Kft. Notary Office Office of Architecture Individual Law Firm Sergiu Petrea Adrian Ianchis Office of Architecture Liviu Dida Andi Cheptine SZEGED Office of Architecture Office of Architecture Notary Office József Braun Claudia Avasiloae DÉMÁSZ Hálózati Elosztó Kft. Ana Potoschi CLUJ-NAPOCA Narcis Gelal Office of Architecture Office of Architecture Notary Office Adrian Cosmin Vinț Mátyás Dr. Császár Bailiff Office Stela Bădărău Dr. Császár Mátyás, George Birsan Gabriela Rogojean Office of Architecture S.C. Raja S.A. Constanta Notary Office Császár Ügyvédi Iroda Dragoș Adam Mihai Roșca Bailiff Office Alexandru Popovici Balázs Dr. Hoffmann Office of Architecture Hoffmann Ügyvédi Iroda Office of Architecture CRAIOVA Ovidiu Ioan Man Ovidiu Taloș Bailiff Office Anelin Dan Toader Alin Enver Katalin Dr. Hofszang Bailiff Office Office of Architecture Dr. Hofszang Katalin Ügyvédi Iroda Office of Architecture Horațiu Pușcaș Bogdan Popa Electrica Distribution Mădălina Voican Tudor Gradinaru Nóra Hajdú Transilvania North Bailiff Office Office of Architecture Integrated Engineering REAL AUTOMATIC SRL  Solutions Kft. Ionuț Lar Aurora Răducanu Alina Simona Tomașeschi Electrogrup SA CEZ Distribution SCA Tomașeschi & Asociații Tamás Lakatos BUCHAREST Integrated Engineering Alexandra Rîmbu Bianca Sime Liviu Dănilă Ionuț Formagiu Solutions Kft. Almaj & Albu SCA Individual Law Firm CEZ Distribution SIGHMA-INVEST Zsolt Magosi Anda Răileanu Cosmin-Leonard Bodescu Alexandru Ciobanu MGI Kft. Almaj & Albu SCA Individual Law Firm Eventa Group ORADEA Magda Albu Andrei-Călin Coroian Alexandru Zaharia Anamaria Bianca Ardeleanu SZEKESFEHERVAR Almaj & Albu SCA Mușat & Asociații Individual Law Firm Bailiff Office Zoltán Üveges Marius Gîrdan Bogdan Ovidiu Trancă, Delia Păușan Elena Mihaela Blejdea Artrea Consulting Kft. Bailiff Office Bailiff Office Notary Office Individual Law Firm Zsuzsanna Dr. Bíró Mihai Cartis Vlad Bătăilă Iustina Dorobanțu Alina Corina Mladin Preoteasa Bíró és Vári Kovács Ügyvédi Iroda Electro Excel Green Consulting SRL Bailiff Office Notary Office Notary Office Miklós Ács, T.Á.M Ștefan Barabas Liviu Gheorghe Andras Kulcsar Eugen Balaci Építész Iroda Kft. Energoteh Proiect SRL C.L. Gheorghe & Asociații - SCA Office of Architecture Notary Office Gergely Mayer Andrea Staicu Silviu Cojocaru Claudiu Botea Gelu Emilian Diaconescu Mayer-Vill Kft. Individual Law Firm Cojocaru Law Office Office of Architecture Notary Office Csaba Dr. Petia Irina Poinar Florina Balenescu Diana Talos Ilie Victor Florea Petia Ügyvédi Iroda Individual Law Firm ENEL Office of Architecture Notary Office Ádám Dr. Weltler Lucian Buzlea Francesco Atanasio Radu Cocheci Bogdan Nita Szigeti, Raszler & Kulisity Individual Law Firm ENEL Office of Architecture Office of Architecture Ügyvédi Iroda Simona Petre Vlad Negru Gabriel Tapus Raluca Ioana Sima-Lenghel Béla Varga Individual Law Firm ENEL Office of Architecture Office of Architecture Tecton Építészmérnöki és Tanácsadó Kft. Ligia Valentina Mirișan Alis Crăciunescu Nadia Ramona Revnic Vlad Besteleu ENEL Distribution Muntenia SC Rosal Grup SA ClujNapoca Office of Architecture Notary Office Ottó Dr. Wölfinger Camelia Precup Mihai Popa Constantin Deaconu Raluca Bodea ENEL Distribution Muntenia TOP INSTAL SRL Oltenia Water Company Notary Office Mihaela Dănilă Sorin Bărbulescu Silviu Dehelean ENERCONSTRUCT SERVICII SRL Proiect Curent Notary Office CONSTANTA Sorina Vlad Dumitru Dușu Răzvan Scafeș Alexandru Maxim Individual Law Firm Bailiff Office Săuleanu & Asociații SPARL Office of Architecture Alexandra Târnovan Ionică Sarkis Alin Sas Law Office Dr. Dan-Sergiu Oprea Bailiff Office Oradea Water Company 184 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA Sorin Marius Țent Mihai Emil Silvestru PORTATIV SRL Office of Architecture Razvan Negrisanu PLOIESTI Office of Architecture Elena Nitu Apa Nova Ploiesti Cătălin Stângă Bailiff Office Cristian Viorel Galea Bailiff Office Mircea Ene DEKATEL S.R.L. Daniela Selter Electrica Distribution Muntenia North Georgeta Harabagiu Electrica Distribution Muntenia North Gheorghe Mihai ESRA SRL Valeriu Stoicescu GENERAL MEEL ELECTIC SRL Oana Magdalena Surugiu Individual Law Firm Radu Vasilescu Individual Law Firm Sorin George Botez Individual Law Firm Corina Manzicu Notalex Eleonora Botezatu Notary Office George Radu Enescu Office of Architecture Ioana Olivia Voicu Voicu Legal Partners - Ioana Voicu Law Office TIMISOARA Cristian Crăciun Bailiff Office Cristian Munteanu Bailiff Office Eleodor Coptil CONS ELECTRIFICAREA INSTAL SRL Lucian Buda ELBA-COM S.A. Mirela Sirian Enel Distribution Banat Amina Cor Individual Law Firm Dan Adrian Cărămidariu Individual Law Firm Mihaela Anișoara Oniță Mârșu Individual Law Firm Ramina Selejan Individual Law Firm Andreea Bucur Notary Office Vlad Bulgar Notary Office Catalina Bocan Office of Architecture Claudiu Oprita Office of Architecture ACKNOWLEDGMENTS 185 PUBLIC SECTOR Rositsa Tomova Pleven Municipality - Directorate Dimitar Genkov Ruse Municipality Anita Laleva National Revenue Agency - Sofia Jasmina Zhekova Varna Municipality - Raion CONTRIBUTORS Technical Support Asparuhovo, Directorate Nachko Nakov Elena Markova Architecture Greta Atanasova Ruse Municipality Registry Agency BULGARIA Registry Agency - Pleven Ivo Dimitrov Strahil Karapchanski Stefaniya Matarova-Dinova Varna Municipality - BURGAS Ruse Municipality Registry Agency Raion Mladost Denitsa Georgieva PLOVDIV Tzenka Zheleva Silvia Stoyanova Mariana Gencheva Burgas Municipality Stefan Stoyanov Ruse Municipality Registry Agency - Sofia Varna Municipality - Deputy Mayor of Plovdiv Ivelina Strateva Raion Mladost Valentin Vichev Velichka Ivanova Burgas Municipality Rymiana Vassileva Ruse Municipality Registry Agency - Sofia Svetla Marcheva National Revenue Agency Krasimir Stoychev Varna Municipality - Andrea Ruzheva Raion Mladost Burgas Municipality Veselin Paperov Sofia Municipality SOFIA National Revenue Agency Mariana Ivanova Aleko Djildjov Valentin Koichev Boiko Sekiranov Varna Municipality - Burgas Municipality Anelia Kurteva Council of Ministers Sofia Municipality Plovdiv Municipality Raion Primorski Nikolay Tzotzomanski Ivan Ivanov Martin Atanasov Hristina Plachkova Petrova Council of Ministers Tzvetanka Naumova Burgas Municipality Sofia Municipality Plovdiv Municipality Varna Municipality - Rumen Sharpov Luybomir Stoyanov Raion Varnenchik Plamen Stankov Burgas Municipality Julia Stoyanova Council of Ministers Sofia Municipality Plovdiv Municipality Rumyana Gorolomova Rumiana Ivanova Nikolay Aleksiev Varna Municipality Infrastructure Tatiana Gerganova Burgas Municipality Lyubomira Spirova Council of Ministers Projects Department Sofia Municipality - Plovdiv Municipality Directorate Architecture Veselina Ilieva Radoslav Milanov Burgas Municipality Maria Dimova Boyadjieva Council of Ministers Daniel Borisov Delev HUNGARY Plovdiv Municipality Sofia Municipality - Directorate Violeta Lazova Anton Gerunov Methodology BUDAPEST Burgas Municipality Mariana Antonova Deputy PM Cabinet Plovdiv Municipality Svetozar Manolov Katalin Dr. Vida Svetla Zaharieva Kalina Konstantinova Budapest Land Registry Sofia Municipality - Directorate Geodesy, Cartography and Miroslava Sukareva Deputy PM Cabinet Methodology Orsolya Lovass Cadastre Agency - Burgas Plovdiv Municipality Viktor Pavlov Budapest Land Registry Dimitrina Ruseva Petia Vulkova Directorate for State Supervision National Revenue Agency - Burgas Plovdiv Municipality Control in Construction VARNA Tamás Borsay Krasimira Bojkova Katelieva Budapest Land Registry Pavlina Ivanova Rositza Angelova Dimitar Kochkov Geodesy, Cartography and National Revenue Agency - Burgas Plovdiv Municipality Energy and Water Cadastre Agency -Varna Zoltánné Jászai Regulatory Commission Mayor’s Office, Budapest Elena Atanasova Sonia Georgieva Emil Rusev XI District Registry Agency - Burgas Plovdiv Municipality Evgenia Haritonova National Revenue Agency - Varna Energy and Water Zsolt Deák Krasimira Papancheva Zlatka Panalova Regulatory Commission Snejanka Gaidarova Mayor’s Office, Budapest Registry Agency - Burgas Plovdiv Municipality National Revenue Agency -Varna XV District Dimitar Plamenov Velichkov Alena Palasheva Geodesy, Cartography and Galina Nikolova Margit Dr. Laza PLEVEN Plovdiv Municipality - Directorate Cadastre Agency - Sofia Registry Agency - Varna Mayor’s Office, Budapest International Cooperation XXIII District Milen Yakov Krasimir Gebrev Ivanka Gencheva Deputy Mayor of Pleven Dragomir Kunev Geodesy, Cartography and Registry Agency -Varna Plovdiv Municipality - Directorate Cadastre Agency - Sofia DEBRECEN Boryana Ivanova International Cooperation Elena Karagiozova Geodesy, Cartography and Dániel Mártha Simeon Draganov, Varna District Court Debrecen Disaster Cadastre Agency - Pleven Georgi Blagoev Geodesy Cartography and Management Directorate Plovdiv Municipality - Directorate Cadastre Agency - Sofia Plamen Atanasov Valentina Stefanova International Cooperation Varna District Court Geodesy, Cartography and Krisztina Dr. Szántainé Dr. Lubka Alexandrova Tóth Cadastre Agency - Pleven lubomira Spirova Invest Bulgaria Antonia Dimitrova Debrecen District Court Plovdiv Municipality - Directorate Varna Municipality Emil Nikolov Tzevtkov International Cooperation Irena Nikolova National Revenue Agency - Pleven Ministry of Economy Ivelina Petkova GYOR Diliana Todorova Varna Municipality Georg Spartanski Registry Agency - Plovdiv Jeliaz Enev Balázs Laki Pleven Municipality Ministry of Economy Juliana Paseva Győr Land Registry Jivka Kaneva Varna Municipality Hristina Hristova Registry Agency - Plovdiv Zhecho Zhechev István Polgári Pleven Municipality Ministry of Economy Nikolai Bonev Győr Mayor’s Office Varna Municipality Ivan Marinov Dilyana Novakova Zoltán Ambrus Pleven Municipality RUSE Győr Mayor’s Office Ministry of Energy Nora Momcheva Ivan Sadjakliev Varna Municipality Paulina Kirova Geodesy, Cartography and Zdravka Pekova Pleven Municipality Cadastre Agency - Ruse Petya Eneva MISKOLC Ministry of Energy Varna Municipality Tibor Vargha Veselka Zdravkova Rositsa Todorova Anton Gladnishki Miskolc Mayor’s Office Pleven Municipality National Revenue Agency - Ruse Ministry of Finance Peycho Peychev Varna Municipality Tzetza Venkova Ovcharova Reneta Vulcheva Verginia Micheva SZEGED Pleven Municipality - Directorate Registry Agency - Ruse Ministry of Justice Polimira Todorova Economic Development Varna Municipality András Dr. Tolna Silvia Petrova Yuliyana Cholpanova Szeged District Court Margarita Bahneva Angelova Registry Agency - Ruse Ministry of Justice Plamen Drumev Pleven Municipality - Directorate Varna Municipality - Tünde Dr. Vida-Sós Revenue and Local Taxes Aleksander Stomanchev Lidia Stankova Directorate Architecture Szeged District Court Ruse Municipality Ministry of Regional Development Ognian Nikolaev Ivanov Galia Dimova Koicheva Pleven Municipality - Directorate Anelia Georgieva Ani Petkova Georgieva Varna Municipality - Raion SZEKESFEHERVAR Revenue and Local Taxes Ruse Municipality National Revenue Agency - Sofia Asparuhovo, Directorate Márta Dr. Gombai Architecture Székesfehérvár District Court 186 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA ROMANIA Iulia Elena Lazăr Gheorghe Șurubaru Andreea Teișanu IASI Bucharest District 3 Cluj-Napoca City Hall Office for Local Taxes of the Paul Ciobanu BRASOV First Instance Court Municipality of Constanta Administration for Public Ligia Subțirică Bianca Lörincz-Kraila Finances of Iași County Delia Cristina Florea Cluj-Napoca City Hall Carmen Trentea Tatu Brașov City Hall Bucharest District 6 Office for Local Taxes of the Alina Mirela Postolache First Instance Court Ramona Rușescu Municipality of Constanta Cecilia Doiciu Directorate for Economy and Public Cluj-Napoca City Hall Brașov City Hall Finances of the Municipality of Iasi Mariana Bălașa Constantina Târpă Bucharest Office for Sanda Spiroiu Office for Local Taxes of the Larisa Andrei Daniel Paul Vasiliu Cadastre and Land Book Cluj-Napoca City Hall Municipality of Constanta Brașov City Hall Directorate for Economy and Public Sorina Popa Finances of the Municipality of Iasi Mihaela Chigai Marcela Mariana Frigioiu Marilena Manolache Bucharest Office for Cluj-Napoca City Hall Office for Local Taxes of the Brașov City Hall Daniela Elena Pînzariu Cadastre and Land Book Municipality of Constanta Directorate for Economy and Public Ana Maria Chirilă Violeta Bulgariu Cluj-Napoca First Instance Court Finances of the Municipality of Iasi Andrei Pană Simona Monica Enache Brașov City Hall Ministry of Justice Office for Local Taxes of the Ana Bob Faustina Popescu Municipality of Constanta Directorate for Economy and Public Ioana Berteanu Răzvan Crăciunescu Cluj-Napoca Office for Brașov County Administration Cadastre and Land Book Finances of the Municipality of Iasi Ministry of Justice Iuliana Tănase for Public Finances Regional General Directorate Felicia Guzu Mircea Popa Marina Elena Găină for Public Finances Liviu Firăstrău Cluj-Napoca Office for Directorate for Economy and Public National Agency for Brașov County Inspectorate Cadastre and Land Book Finances of the Municipality of Iasi Cadastre and Land Book Viorel Acsente for Constructions Regional General Directorate Liliana Simona Ionescu Victor Grigorescu Monica Octaviana Negulescu for Public Finances Bogdana Maria Maruşca Cluj-Napoca Office for Directorate for Economy and Public National Agency for Brașov First Instance Court Cadastre and Land Book Finances of the Municipality of Iasi Cadastre and Land Book Luiza Mardare The Trade Registry Office at the Petronela Bîrliba Ovidiu Ciurea Iulia Bărbieru Gabi Petrescu Constanța Court of Justice Directorate for Economy and Public Brașov Office for Cadastre National Agency for Directorate for Local Taxes and Land Book of Cluj-Napoca City Hall Finances of the Municipality of Iasi Fiscal Administration Marinela Slătineanu The Trade Registry Office at the Cristinel Tărnă Radu Simion Moța Cristina Pîrvu Liana Căprar Constanța Court of Justice Head of Urbanism Service of Brașov Office for Cadastre National Regulatory Directorate for Local Taxes and Land Book the Municipality of Iași Authority for Energy of Cluj-Napoca City Hall Marian Voinescu CRAIOVA Alexandru Mustață Alina Ignat Ioana Popa Fiscal Directorate of the OCPI Cluj-Napoca Claudiu Popescu Iași City Hall Regional Inspectorate for Municipality of Brasov Constructions Bucharest Craiova City Hall Mariana Man Doina Buzea Adriana Donțu Regional General Directorate Gabriela Miereanu Iași City Hall Florica Salaytah Regional General Directorate State Inspectorate for for Public Finances Craiova City Hall for Public Finances Radu Lupășteanu Constructions Iași County Inspectorate Dorin Marius Deac Liliana Fugaru Daniela Flesaru Craiova City Hall for Constructions Victor Cândea The Trade Registry Office at Regional General Directorate State Inspectorate for the Cluj Court of Justice for Public Finances Marius Mirea Gheorghiță Scutaru Constructions Iași County Office for Craiova City Hall Gheorghe Neculoiu Cadastre and Land Book Adriana Smaranda Petre CONSTANTA Ioana Nicoleta Spiridonescu Territorial Planning Service of Tax Collection Directorate of the Municipality of Brașov Aura Emilia Modi Craiova First Instance Court Ion Bogdan Șavlovschi Regional General Directorate Constanța Administration Iași County Office for for Public Finances Rodica Irinel Păsculeț for Public Finances Emil Laurențiu Gavriloiu Cadastre and Land Book The Trade Registry Office at Directorate for Local Taxes of Alice Ioana Buciu Doinița Radu Elena Loredana Alexandrescu the Brașov Court of Justice the Municipality of Craiova The National Trade Register Office Constanța Administration Iași First Instance Court Tatiana Toma for Public Finances Anda Mădălina Bogdan Mihail Burdescu Mihaela Nistor The Trade Registry Office at Dănescu-Crețu The National Trade Register Office Cristina Stamat Iași First Instance Court the Brașov Court of Justice Dolj Administration for Constanța City Hall Public Finances Valentina Burdescu Cristian Țebecailo The National Trade Register Office Ionela Halciuc Regional General Directorate BUCHAREST Ionela Mihaela Radu Constanța City Hall Dolj Administration for for Public Finances Andrei Zaharescu Dragoș Cristian Stanciu The Trade Registry Office at the Public Finances Bucharest City Hall Nicoleta Constantin Gina Manuela Șindilă Bucharest Court of Justice Constanța City Hall The Trade Registry Office at Ovidiu Șerban Țuculina Cătălina Iordache Dolj Administration for the Iași Court of Justice Bucharest City Hall Gabriela Fierbințeanu Viorel Sorin Munteanu The Trade Registry Office at the Public Finances Constanța City Hall Gheorghe Pătraşcu Bucharest Court of Justice Daniela Efta ORADEA Bucharest City Hall Viorica-Ani Merlă Dolj County Inspectorate Ioana Florentina Mihăilescu Constanţa City Hall Eugenia Rus for Constructions Cristina Nicoleta Ghiță The Trade Registry Office at the Bihor County Administration Bucharest District 1 First Bucharest Court of Justice Andreea Lăzărescu for Public Finances Bogdan Adrian Ogarcă Instance Court Constanța County Office for Dolj County Office for Mona Georgeta Baban Cadastre and Land Book Magdalena Berce The Trade Registry Office at the Cadastre and Land Book Bihor County Administration Roxana Mihaela Duma Bucharest District 2 Bucharest Court of Justice Marian Mazilu for Public Finances Costinela Augustina Chimoiu First Instance Court Constanța County Office for Dolj County Office for Cadastre and Land Book Lucian Chindlea Cadastre and Land Book Bihor County Inspectorate Diana Gabriela Todosi CLUJ-NAPOCA Bucharest District 3 Ștefana Moise for Constructions Gheorghe Coman Oana-Manuela Dincă First Instance Court Cluj County Inspectorate Constanța County Office for The Trade Registry Office at Cadastre and Land Book Călin-Sorin Ivan-Leț for Constructions the Dolj Court of Justice Gabriela Dunca Bihor County Office for Bucharest District 3 Claudia Bojin Cadastre and Land Book Leontina Kovacs Ovidiu Mihail Călinescu First Instance Court Cluj County Office for Constanța First Instance Court The Trade Registry Office at Marcel Daniel Dragoș Cadastre and Land book the Dolj Court of Justice Bihor County Office for Ioana Daniela Stăncioi Mihaela Cristina Grădinariu Bucharest District 3 Constanța First Instance Court Cadastre and Land Book Emilia Alina Botezan Stela Mihaela Ene First Instance Court Cluj-Napoca City Hall Urbanism and Nomenclature Service Adriana Lipoveanu of the Municipality of Craiova Oradea City Hall ACKNOWLEDGMENTS 187 Eduard Florea Arthur Marius Ursu Oradea City Hall Timiș County Office for Cadastre and Land Book Radu Ciprian Harja Oradea First Instance Court Horațiu Moldovan Timiș County Office for Delia Ungur Cadastre and Land Book Oradea Local Development Agency Alin Moga Anca Anton Timișoara City Hall The Trade Registry Office at the Bihor Court of Justice Andreea Stănilă Timișoara City Hall Ioana Maria Cărăman The Trade Registry Office at Daniel Marcu the Bihor Court of Justice Timișoara First Instance Court Manuel Bălan PLOIESTI Timișoara First Instance Court Mioara Drăghici Office for Local Public Finances of the Municipality of Ploiesti Simona Dolniceanu Office for Local Public Finances of the Municipality of Ploiesti Coca Elena Pătrașcu Ploiești City Hall Daniela Croitoru Ploiești City Hall Ioana Otilia Pelin Ploiești City Hall Mihaela Țaporea Ploiești City Hall Milena Perpelea Ploiești City Hall Ana-Maria Achim Ploiești First Instance Court Violeta Elena Georgescu Ashemimry Ploiești First Instance Court Gelu Paraschiv Prahova County Inspectorate for Constructions Neluța Chivu Prahova County Office for Cadastre and Land Book Virgiliu Daniel Nanu Prahova County Office for Cadastre and Land Book Dan Dumitru Constantin Taxpayers Section of the Regional General Directorate for Public Finances Ilinca Simionescu The Trade Registry Office at the Prahova Court of Justice TIMISOARA Adrian Bodo Fiscal Directorate of the Municipality of Timisoara Steluța Marin Regional General Directorate for Public Finances Carmen Nicoleta Mixich The Trade Registry Office at the Timiș Court of Justice Floarea Brinda The Trade Registry Office at the Timiș Court of Justice Vergina Popescu Timiș County Inspectorate for Constructions 188 DOING BUSINESS IN THE EUROPEAN UNION 2017: BULGARIA, HUNGARY AND ROMANIA www.doingbusiness.org/EU1 Supported by the