Project Brief Investment Climate | World Bank Group Improving the Regulatory Framework in Kosovo Project At A Glance Results and Impacts Country/Region KOSOVO/EUROPE AND CENTRAL ASIA • Significantly improved rating for Product  INDICATOR-BASED REFORM ADVISORY Kosovo in the World Bank Group’s Theme Fragile and conflict-Affected Area Doing Business 2013 report due to enactment of regulatory reforms. The objective of the Indicator Based Reform Advisory project for Eastern Europe and Central Asia is to help client governments • Elimination of multiple requirements implement reforms in areas measured by investment climate cuts six days from time required to indicators. These reforms are expected to improve the regulatory start a business. environment for firms to encourage entrepreneurship, investment, • Integrated system allows businesses and formal job creation. to receive registration and tax documents at one of 29 new one- stop shops. Context • Simplified procedures to lower Thirteen years after the end of the Kosovo conflict and four years costs and reduce compliance time after achieving independence, Kosovo has an economy still largely for construction permits; provided driven by remittances and public-sector spending. Champions of investor protections with increased reform in government seek to change gears and drive private-sector- disclosure and ease of filing led growth. Fledgling businesses have been hampered by costly and shareholder lawsuits. complex procedures to opening their doors. Previously it required more than six weeks and a trip to the capital to complete the In Partnership with USAID World Bank Group permitting process. Potential investors hesitated because Kosovo’s government has also introduced legislation of a lack of investor protections and difficulty dealing with that streamlines the process of obtaining a construction construction permits. Regulatory reform was required to permit. The new Law on Construction was drafted in update Kosovo’s business procedures. accordance with international best practice. This law simplifies procedures and lowers costs; for example, the survey and registration charge was decreased by 80 Our Role percent. Procedures related to compliance with technical Investment climate teams of the World Bank Group requirements can now be accomplished in 23 days instead began advising the government in March 2010 to identify of 32 days. reforms in three areas tracked by the Bank Group’s annual Doing Business report: starting a business, dealing with construction permits, and protecting investors. The project worked with the Kosovo Business Registration Agency (KBRA) and the Tax Authority to introduce a new, integrated business registration system. Participants were able to transform existing business centers in many cities into one-stop shops for licensing so that a trip to the capital is no longer necessary. Recent measures have resulted in the following improvements: • It now takes 52 days to register a business, six days less than in the 2012 Doing Business report. • The minimum capital requirement, the fee to register, and municipal work permit were eliminated. • The time limit for the KBRA to process two required documents has been reduced from 10 to three days. The project also helped the government implement Twenty-nine one-stop shops now process business new protections for investors. The Law on Business registrations throughout the country. Business owners are Organizations was amended by increasing disclosure able to obtain a fiscal certification and value-added tax and making it easier for minority shareholders to pursue certificate at the time of registration. lawsuits. The changes require directors to disclose any potential conflicts of interest to all shareholders and the public. Transactions must be approved by a majority of shareholders without a vested interest. In lawsuits, plaintiffs must also be provided with all related documents. “I was surprised with the new way to register and The government intends to forge ahead with regulatory curious to know what had happened.” reforms to create a more business-friendly environment. The next step is a full-service one-stop shop in one day, Shani Hamitaga with online registration. Reform champions in government Real Estate Agency Owner Globi Group, LLS are also targeting a 50 percent cut in licenses and permits by 2014. Contact Iva Hamel | Senior Private Sector Development Specialist | Investment Climate Email: IHamel@ifc.org | TEL: 39-333-460-2506 | www.wbginvestmentclimate.org