55728 BEnER REGULATION SERIES VII. III Bulgaria EX-POST IMPACT ASSESSMENT If ilia Act an limiting Administntive Ragulatian and AdministntiVa Cantral an Ecanamic Activitv -~.. ~~--------------------------------_ _ _«finciple of "silent consent" for re~tration reJlimes . Broad implementation of declarations of compliance by applicants, along with suitable . mechanisms for verifYing those declarations, instead of requiring official documents issued by a i . . court or other administrative bodies 4 Establishment of a minimum time period during which an applicant for a license or permit can correct mistakes on the application 5 Improved oversight and control of the sanctioning mechanism within the administration and I reduction of the burden on controlled entities .. . . . 6 Introduction of instruments enabling an analysis of whether proposed regulatory regimes comply I with the three groups of criteria under the LARACEAA (national and personal security. human I and propert;y~jsl!ts. and environment) . . .. L Institutional amendments , 7 : Establishment of a unit within the Council of Ministers Administration that would oversee 11m lementatJon ofthe Act and Impose sanctIOns when pubhc admmlstratJon offiCIals VIOlate It 8 Establishment of a uniform Administrative Register of regulatory regimes to provide easily accessible information and advice on all rocedures and re uired documents to all clients Economic amendments 9 Introd~~7additiO~~s~ing charges for administrative services . I 10 Regulation of the amount gfthe charges on the basis of adopted rules _ 11 Introduction of the principle "one procedure - one charge." Surcharges should be prohibited when 'I· additional actions are required for an applicant to correct mistakes or as an incentive for .I administrative officials to perform their jobs . . ._ _ _ _ _-' The recommendations listed above may help the Bulgarian authorities use the LARACEAA to further advance regulatory reform. But they should proceed in parallel with other actions under the Better Regulation Program and related initiatives. An improved Act can become a powerful means of reform only if it is part of those broader efforts and has political support at the highest levels. I INTRODUCTION 1.1 Importance ofthe LARACEAA Policymakers consider that the adoption of the LARACEAA is a significant step forward in the process of regulatory reform in Bulgaria. The Limiting Administrative Regulation and Administrative Control on Economic Activity Act (LARACEAA) was adopted in 2003 to facilitate and encourage economic activity by defining and placing publicly justified limits on the regulations and controls imposed on businesses by national and local government bodies. Policymakers consider that the LARACEAA is a substantial step forward in the process of regulatory reform in Bulgaria. In its current version (as of January 2010), LARACEAA is the result of sixteen amendments. 1 Although the 2003 Act was modified from its initial draft, majority of experts and business leaders consider that the Act created the basis for a more conducive regulatory environment in Bulgaria. The initial draft of the Act was prepared by a team of lawyers and economists from the Bulgarian Small and Medium Enterprises Promotion Agency, the Institute for Market Economics, the Bulgarian Chamber of Commerce and Industry (BCCI), the Bulgarian Industrial Association, the Commission on Economic Policy to the National Assembly and the Ministry of Economy. The idea was to adopt rules restricting the unjustified intervention of state and local authorities into the activity of entrepreneurs and commercial companies. Some proposals in the initial draft were not included in the adopted version of the Act. These included such matters as, (i) considering the option of not introducing a regulation; (ii) the requirement for official exchange of information and documents among the institutions2; (iii) applying the principle of "silent consent" to regimes with no expedience (registrations); (iv) the possibility for the administration to authorize business associations to perform self-regulation, among others. Even so, the majority of experts and business leaders considered LARACEAA to be a statutory Act laying the basis for a more conducive regulatory environment in Bulgaria. LARACEAA stipulates two types of regulations. The Act specifies two types of regulations: (i) regimes regarding the performance of overall economic activity, and Oi) regulations regarding separate deals and the execution of single business actions. Some activities stipulated by the Act can be subject to a licensing regime, and other activities can be subject to the more liberal regime, defined by the Act as a "registration" regime. Overall, LARACEAA is a common Act setting clear rules for administrative bodies in exercising regulation and control of economic activity. The Act sets up clear rules related to both the legislation and responsibilities of administrative bodies in exercising regulation and control on economic activity. In its most important provisions, the Act: 1. Sets up the guiding principles of legislation and administrative procedure related to economic activity. Among these, the principles of economic freedom (proclaimed by Art. 19, Constitution), proportionality and legitimate expectations are of particular importance; ll. Provides that all regulatory regimes and requirements for permits, certifications and notifications of separate deals and actions must be authorized by a law. It defines two types of regulatory regimes: licensing and registration; iii. Introduces the requirement that regulations at all levels must be motivated by a clearly defined necessity (from the viewpoint of national security, environmental protection, or the personal and material rights of individuals), thus limiting the discretionary power of regulators; iv. Introduces compulsory ex-ante economic analysis and impact assessment for each regulation, which must be made public, as well as a requirement for informing in advance those persons (stakeholders) who will bear obligations or restrictions by virtue of a new regulation; v. Limits the power of administrative bodies to require applicants to submit proof of circumstances which are certified before another administrative body and which are properly entered in a register; vi. Defines the obligations of the administration in exercising its powers; vii. Introduces the principle of "silent consent" for issuing permissions and certificates; viii. Constitutes the main rules for executing control on business activities; IX. Adopts a list of economic activities covered by a licensing regime. 1.2 Scope ofthe Assessment This report is a result of collaboration between the Government of Bulgaria and the World Bank. The ex-post LARACEAA report is part of a World Bank support to the Government of Bulgaria through an on-going analytical and advisory work in the area of regulatory reform. This collaboration contributed to Bulgaria's recent progress in the field of Better Regulation. The purpose of this Assessment is to assess ex-post the impacts of the Act. The assessment determines the extent of effect on target groups, institutions, economic environment and the legal system. It also answers the question of whether and to what degree the realized impacts resulted directly from the adoption and implementation of the Act. The period covered for this report is from January 2004 when the Act entered into force through the end of2009. The Assessment used both quantitative and qualitative methods of analysis. Data and information from different national and international sources has been collected and processed, coupled with a survey addressed to researchers, business representatives, and experts from public agencies and state institutions applying the Act. Results from analysis of the implementation of four exemplary regulatory regimes in three municipalities are provided as well. 1.3 Sources ofInformation This report draws on international best practice guidelines. This ex-post assessment foHows the January 2009 Impact Assessment Guidelines of the European Commission (EC). Best practices in impact assessment applied by international institutions and organizations, such as the Organization for Economic Co-operation and Development (OECD), the World Bank, the United States Agency for International Development (lJSAID), etc., were also studieo_ Given that the EC guidelines are relevant mostly to ex-ante impact assessments, this study also considered the 200 I Guidelines of SIGMA (a joint initiative of the GECD and the EU, principally financed by the EU).3 The team also considered Regulatory Impact Assessment (RIA) guidelines, manuals and instructions developed in Bulgaria on the basis of international standards and best practices for the assessment of regulatory impact. 4 Consultations were carried out as well. There were also consultations carried out for this assessment, involving a broad circle of representatives of interested parties, including the National Assembly, central and local government institutions, bodies of local self-governance, business associations, non-governmental organizations (NGGs), and academia. Empirical studies were conducted, but the analysis relied mostly on data and information from other sources. The present Assessment made empirical studies (e.g. survey and analysis of enforcement of local regulatory regimes in three municipalities), but mainly relied on information and data published in official documents from national and international sources, as well as from additional sources. 5 1.4 General Limitations ofthe Analysis This report presents an ex-post assessment on the overall economic activity in Bulgaria but there are general limitations for the assessment. The report presents an ex-post assessment of the impact of LARACEAA on the overall economic activity in Bulgaria and on all legal subjects who take part in it. There are, however, certain barriers of the analysis that along with the presence of a number of informational, institutional and statutory impediments-constitute limitations for the assessment. Specificity of the legal system. The general nature and comprehensiveness of the Act make it difficult to determine whether and to what an extent the observed impacts resulted from the action of LARACEAA itself, or from the action of other interventions, legislation and factors. In the Bulgarian legal system, the legislation hierarchy consists of the Constitution, laws and regulations. The Bulgarian legal system does not recognize the so-called "constitutional laws" that would hierarchically stand above common laws (LARACEA is a common law) and could regulate the general principles that common laws have to conform with. In logical sequence, common and special laws should specify the legal norms of the Constitution from general to specific provisions, while special laws, in turn, should specify and operationalize common laws. Quite often, however, logical contradictions arise among the laws. In such cases, an interpretation of the will and intention of the legislature is required. Where there is a conflict between a common and a special law, the rules of the special law shall be applied (lex spetialis 3 According to SIGMA (2001, p.19), the impact of operative regulations is assessed to evaluate whether: (i) the intended objectives were met in an efficient way; (ii) unwanted side effects occurred and to what degree; (iii) the instrument has proven to be easily implementable; (iv) a high degree of compliance has been reached; and v) benefits and costs were distributed in a justifiable manner. 4 Those materials include Bulgaria Impact Assessment Guidelines, Council of Ministers (CoM), 2009; Regulatory Impact Assessment Manual, Institute of Market Economics, 2007; Regulatory Impact Assessment Manual, Association of Management Monitoring (in co-operation with USAID), 2007; and Impact Assessment, Ministry of Economy and Energy, April 2006. 5 Such information included, among others: documents and papers of the National Assembly, the CoM, and sectoral ministries (including programs, strategies, reports, laws, ordinances, decisions); comparative and national studies, ratings, reports, and databases of international organizations such as the World Bank, the OECD, the EC, the World Economic Forum and the Institute for Management Development MTITC; Studies and positions of the Economic and Social Council of the Republic of Bulgaria, the Bulgarian Industrial Association (BIA), the Q"lcf!>ri<>n f'hilmher of Commerce and Industry, Bulgarian Industrial Capital Association, other business derogat generalis). This allows for special laws to contain provisions that contradict the principal rules contained in common laws, and actually to revoke them. Regarding regulation, LARACEAA is a common law setting the most general principles of regulation. The particular application ofthese principles in different economic branches- for example energy, commerce and manufacturing, etc.-is subject to other special laws. For instance, the Law on Energy provides a licensing regime for energy producers with over 5 MW of installed capacity. In this case, the licensing requirements under the Law on Energy shell comply with the provisions of LARACEAA. Practically, though with lower legal status, the Law on Energy's regulations can revoke LARACEAA's general provisions (e.g. by containing rules that contradict LARACEAA's general principles). Ex-ante Assessment of the Act is missing. An ex-ante assessment of the Act was not done. This is the reason why the goal, objectives and the related performance indicators were not initially articulated in a clear way. The base values of indicators were not determined, either. In the ideal case, the ex-ante assessment contains a set of goals, objectives and performance indicators by which progress is measured, as well the base values to which impact effects are compared. In the current case, the set of goals, objectives and indicators is constructed subsequently and serves as a basis for determining and estimating the effects and benefits of the Act. ED Accession had a special impact on the Bulgarian economy as it required introduction of many new regulations. The LARACEAA ex-post impact assessment covers a specific period of development of the national economy, notably its transition from associate to full EU membership. On the one hand, an adjustment had to be made of a great number of regulatory regimes, stemming from Bulgaria's integration with the EU and its acquis communautaire. It is well known that the EC requirements play a significant role on the amount of the administrative costs. 6 On the other hand, however, there was a strong pressure and growing demand for optimizing the role of the public administration in economic activity and reducing the regulatory burden on businesses. During the analyzed period, therefore, the regulatory environment framework and the public administration were subject to the influence of mutually contradicting factors, which inevitably resulted in inconsistency of the achieved results. Performance monitoring system with concrete indicators to evaluate the administrative and regulatory burden in Bulgaria is missing. Discussions about the reform of the regulatory regimes started about a decade ago. Projects of the Department for International Development of the UK and the World Bank on reducing the administrative barriers to business were initiated at that time. In fact, the adoption of the LARACEAA has been one of the performance benchmarks of the World Bank's Second Programmatic Adjustment Loan to the Government of Bulgaria, which observed Government accomplishments by end 2003. The establishment of the first entrepreneurs' desks in the municipalities of Vidin and Pazardjik is a result of the efforts of the UK Agency. However, the performance monitoring system is still underdeveloped in Bulgaria. That makes it difficult to assess the impact of the Act since 2004. For instance, a number of estimations of overall regulatory burden have been provided annually by different sources. Sometimes the measurements differ due to different methodologies used to estimate the same phenomenon? In addition, there are no estimations of the administrative 6 By applying the Standard Cost Model, the Swedish Agency for Economic and Regional Growth calculated that this impact consists in 99 percent regarding the administrative cost in the food industry and 73 percent in agriculture (see NRR, 2008). 7 For instance, one World Bank study shows that proceeding from the "least favorable" to the "most favorable" quartile on a ranking of the regulation of business activities leads to an additional annual growth of 2.3 points of GOP (see Ojankov, S., et.al., 2006). European Commission studies show a smaller impact on GOP growth resulting from reduced regulations. According to a research by the EC, if measures to reduce the administrative burden by 25 percent were applied in all EC counties (as per Lisbon objectives), the GOP would increase between 1.1 percent and 1.9 percent, depending on applied models. A simulation of the model QUEST shows an increase of the GOP by 0.3 percent in 2020, and this increase could be as much as 0.7 percent if markets are sufficiently . . burden on economic activity in Bulgaria based on accepted methodologies, like the Standard Cost Model. s Therefore, it is very difficult to evaluate the impact of the Act on the level of administrative burden in Bulgaria since 2004. 1.5 Structure ofthe Report The following Chapter II of the report presents the background of the LARACEAA and the assessment. It defines a policy framework, a goal and objectives of the Act and it presents a set of performance measurement indicators used. Chapter III depicts the results of the ex-post impact assessment. The first subsection provides additional analyses on government measures for limiting administrative burden on businesses, various institutional initiatives, Impact Assessments (lAs) and training, as well as legislative improvement. The chapter combines quantitative and qualitative methods for the analysis. The supplementary qualitative methods are based on: (i) a survey of key stakeholders on the accomplishment of LARACEAA's goal, objectives and main tools for attaining the objectives, and (ii) a unique study on implementation of four regulatory regimes at the local level. The second subsection presents status and dynamics of outcome indicators, output indicators and results indicators. Main findings of the IA are summarized at the end. Based on the ex-post impact assessment of LARACEAA, the final Chapter IV identities the main problem, discusses underlying drivers and effects of the problem and proposes key recommendations to improve the Act in three particular areas: instrumental, institutional and economic. assessments of the impact of the reduction of the administrative burden on businesses. According to the first assessment, the reduction of regulatory burden by 20 percent will result in an increase of 0.72 percent of GDP until 2025, and the respective figure of the second assessment is 1.44 percent. In the more distant future, to 2055, as per NRR study (2009), it has been calculated that the increase of the GDP over the period will be 1.6 percent. Still, others have calculated that " ...companies in member states which have not implemented comprehensive programs for reforming their regulatory frameworks-such as Bulgaria-would incur direct costs of 10-15 percent of GDP" (see Jacobs & Associates and Institute of Market Economics, 2009). This estimate. however, does not include reduced effectiveness of the economy. t BACKGROUND OF THE ASSESSMENT , ft . 2.1 Policy Framework The better Regulation Policy is a major priority of the EU, as it is an important factor for reaching the targets of the Lisbon Strategy. Improvement of regulations aims to promote the public interest in a way that supports rather than hinders the development of economic activity. Regulatory frameworks and conditions created for business development by the state are among the main factors affecting business activity and economic growth. In 2002, the EC started a large-scale program for improving administrative regulation. The EU member-states initiated a series of activities and measures to improve business environment and the quality of new legislation to raise the competitiveness of the European economy. Reducing interference of the state are what the EU countries' legislative programs encourage. The principle underlying the legislative programs of the EU countries is the reduction of interference by the state; if interference is inevitable, regimes are graduated in direction from the "heavier" to the "weaker" (see Figure I). LFigure 1: Escalator of Regulatory Regimes "-~"'~.-"'"-"-'.---~-~.~'~'--'---"'---".'---"~.-"- j -= licensing ~ ::r:: permlaston regiStration notmeation Control Freedom State Intervention Source: Authors' graph. The heaviest regime (in terms of state interference) would be licensing whereas the weakest regime would be notification (see Figure 1). Within the EU, alternative forms, such as "co regulation" and "self-regulation" by business are also considered as "Better Regulation." The EC launched a new ambitious program for reducing unnecessary burden. In 2006, later, the European Council approved a Community target of reducing administrative burdens by 25 percent until 2012. To meet the target of the new EC program, Bulgaria developed national programs with measures to reduce administrative barriers and to facilitate creation of supportive business environments. Bulgaria developed two particular programs to address the new EC initiative in the area of Better Regulation, namely the National Reform Program (2007-09) and the Better Regulation Program (2008-2010) discussed below. The National Reform Program (2007-09) was a main strategic document of the Bulgarian Government, having an impact on measures to improve the business environment. The document aimed at systemizing the efforts of public administration, the NGOs and social partners in reforming the Bulgarian economy to achieve sustain ably high rates of economic and employment growth. This was the first National Reform Program (NRP) for Bulgaria presented to the EC and the other member-states in March 2007. The starting points for the program were the Integrated Guidelines for Growth and Employment recommended by the EC in formulating policies and measures to achieve the targets of the Renewed Lisbon Agenda. In fact, the NRP was developed in response to the challenges posed to the EU member-states by the Renewed Lisbon Strategy. The NRP is a strategic document defining a medium-term framework of measures and priorities in the fields of macro- and micro-economic development, the labor market and human capital development. In fact, improving the business environment was one of the specific priorities of the NRP. Actions of the Government were directed at setting and strengthening good governance principles by finding the optimum ratio between administrative regulation and simplification of certain administrative regimes. The objective was to reduce the time required for issuing business licenses and permits. The NRP envisaged improvement of the business environment in two main areas: good governance in public administration and reducing administrative and regulatory barriers to entrepreneurship. Another more specific program is the Better Regulation Program (2008-10). In 2008, the Council of Ministers (CoM) approved the Better Regulation Program 2008-2010, directed at achieving sustainability of the process of building a good regulatory environment. The goal of the program was to reduce administrative barriers to business and to improve administrative regulation. It was expected that the program results in building an environment of better regulation in Bulgaria, in the context of the EU Lisbon Strategy, through the National Reform Program (2007-2009), the Investment Encouraging Strategy (2005-2010), and the National Small and Medium Enterprises Promotion Strategy (2007-2013). The measures of the Better Regulation Program aimed to contribute to developing a regulatory system with low expenses and small risk, thus supporting the national competitiveness and at the same time efficiently protecting public interests. To attain this objective, Bulgaria needed to build the required capacity in compliance with best European regulatory practices. To reduce administrative barriers to business and to improve administrative regulation four objectives were specified by the Better Regulation Program 2008-10, namely: · Abolition or simplification of administrative regimes; · Establishment of an institutional structure for implementation and control of Better Regulation Policy; · Acceleration of the dialogue with interested parties; · Regulatory improvement at the municipal level and strengthening of regional and municipal capacity for good regulatory practices. Concrete measures were developed to attain the program's objectives. Regarding the first stakeholders. As an initial step in this direction, concrete administrative regimes are identified to be abolished and simplified after proposals by business associations. The program also envisaged a measure related to Bulgaria's commitment to the EC Action Program for reducing unnecessary administrative burdens stemming from the existing legal structure of the EU. Abolition or simplification of administrative regimes, implementation of alternative regulation and reduction of administrative burdens had to take into account the role of the state in protecting national security and public order, and its explicit and sovereign rights stipulated by Art. 18, para. 1-4, of the Constitution of Republic of Bulgaria, as well as the necessity for protecting the personal and property rights of citizens and legal persons, and of the environment. Part of the measures under the Better Regulation Program regarded activities related to the integration of administrative services on the principle of "episodes of life" and "business events" so as to ease and simplify access to and delivery of complex services. Reforming regulatory regimes was/is given particular attention in other national strategic documents as well. Such strategic documents are the National Strategic Reference Framework (NSRF) 2007-2013, the Convergence Program 2009-2012, Operational Program "Administrative Capacity" (OPAC) (2007-2013), the Electronic Government Strategy, the Medium-term Fiscal Framework 2010-2013, Bulgaria Investment Encouraging Strategy (2005 2010), and the Government's European Development of Bulgaria Program (2009-2013). These documents also envisage measures and activities aiming at improving the business climate and reducing administrative barriers to economic activity. For instance, Priority 3 of the NSRF 2007-2013 is "Promotion of entrepreneurship, favorable business environment and good governance." Strategic priorities set by NSRF are further developed in seven National Operational Programs. In fact, part of the funds under Operational Program "Administrative Capacity" (OPAC) are planned to cover the fulfillment of Priority 3. It needs to be further specified that achieving the targets of NSRF is envisaged by a set of measures grouped into four priority axes. Priority Axis III is defined as "High-quality administrative services and development of electronic governance." Beneficiaries under the program include central, regional and municipal administrations; the judicial system; NGOs; and structures of the civil society. Further, by adopting the Strategy on the Electronic Government9 in 2002, the Government undertook to provide 20 main administrative services electronically, including 12 services for the citizens and 8 services for business. The same are approved by the EC as indicative for the development of electronic government. The strategy was updated in 2006. 10 The current Government continued working on regulatory reform. The present Government undertook measures on optimizing the administration and reducing the administrative burden. This is discussed by the World Bank (20 lOb) report on Administrative and Regulatory Barriers to Business. II Particular measures to improve the business environment are envisaged also in the Program of the new Government, entitled European Development of Bulgaria (2009-2013).12 As envisaged by the Convergence Program 2009-2012, the current Government plans to undertake an elimination of 136 administrative obligations, thus contributing to a saving of EUR 13 million by business. Moreover, a 20 percent reduction of administrative burden, which is targeted, would result in a 1.44 percent growth in GDP by 2025. 13 9 Decision N~ 866/ on December 28, 2002 of the CoM (2002a). 10 Decision N!! 48212006 of the CoM. II See more details about current government measures in World Bank (20 lOa) The Medium-Term Fiscal Framework 20 10-2013 14 adopted by the CoM also contains measures on improving business environment, creating favorable conditions for development of business and encouraging investments in Bulgaria. Measures related to the business environment include: · Review and bringing into compliance of all existing regimes with regard to their lawfulness and appropriateness; · Review and determination of real rates of fees paid for licensing, permission, etc.; · Reduction of quasi-taxation burdens through liberalizing product market regulations as a precondition for diminishing corruption and the influence of special interest groups; · Increase the productivity of public expenditures and the quality of goods and services delivered by the state. Overall, Bulgaria follows the EU policy on Better Regulation Agenda, and as a result has adopted several strategic and specific programs to address the issue since 2004. However, impact of the regulatory reform policies is yet to be seen. In recent years, the Bulgarian Government has adopted several national and more specific programs, targeting reduction of the administrative burden and relief of regulatory barriers for firms to address the Lisbon Strategy of the EU. But implementation of the provisioned measures is ambiguous. The current Government has also planned activities to improve the business environment. However, results from the impact of these policies are yet to be seen. The next subsection discusses in brief the goal and main objectives pursued by the Act in order to provide the ground for the selection of performance indicators used to assess the impact of the Act both in qualitative and quantitative terms. 2.2 Goal and Objectives ofthe Act LARACEAA establishes the general rules of limiting administrative regulation and administrative control of economic activity. The Act's goal (or general objective) is to place publicly justified limits on administrative regulation and control of business and to raise the national competitiveness. LARACEAA is the first significant legislation in Bulgaria that aims to define the acceptable limits of administrative regulation and control on business. So formulated, the rational of the Act stems from the liberal idea of the "limited" state which, as laid down in the motives of the Act, "limits and controls itself in favor of business and public society.,,15 The Act identifies a public interest in three major areas of regulation of economic activities (Art. 2, LARACEAA), namely: · National security and public order (sovereign rights of the state); · Personal and property rights of individuals and legal persons; · Environmental protection through regulated economic activity. Going beyond these limits means overregulation and over-control (Le. publicly unjustified burdening of economic activity), according to the Act. This self-limitation of public power represented by public authorities and local governance bodies is in full conformity with the spirit of Art. 19, para. I of the Constitution of Republic of Bulgaria. It proclaims the right to free economic initiative as a basis of the national economy. This means that freedom of economic activity is the rule and any kind of restriction is an exception to the rule. The socio-political as well as the legal-and-regulatory logic demands that exceptions to the rule are regulated, interpreted and applied restrictively and not extensively. Imposing limits on intervention by public authorities in business activity does not mean such interventions are abolished; it does mean that interventions must be precise, reasonable, and acceptable from the viewpoint of modern society. In addition, it should be taken into account that LARACEAA does not cover the whole range of relationships between the business community and the state administration. This Act cannot be identified as an administrative economic code. As underlined above, the Act's goal is to establish clear principles for introducing and implementing restrictive administrative regimes in economic activity. Therefore, all daily administrative relationships regulated by the Administrative Procedure Code and many other special laws remain beyond the scope ofLARACEAA. Several major objectives pursued by the LARACEAA are identified: · Protect free economic initiative; · Clearly outline the limits of administrative intervention in economic activity at central and local levels; · Restrict and reduce publicly unjustified burdening of economic activity; · Provide clear definition of the types of regimes regulating economic activity; · Increase transparency in the introduction of regulatory regimes; · Limit the informal economy by reducing the administrative burdens on legitimate economic activity; · Limit the enactment of new regulatory regimes (licensing or registration) by requiring evidence of the necessity for such a regulation and advance notification of affected persons; · Eliminate normative requirements that are likely to reduce competition; · Reduce the sources of corruption by limiting the discretionary power of administrative agencies and officials; Ensure publicity in the work of administrative authorities in applying regulations and controls on economic activity, as well as of the reasons for such actions. 2.3 Performance Indicators ofthe Assessment The definition of performance indicators follows the division of the objectives in two groups, namely: goal and a set of objectives. The goal represents the long-term effects and impacts of the regulation on the direct target groups and other interested parties (see Table 1). The specific objectives represent the more immediate results and effects of intervention on the respective target groups. That is why the specific objectives have a more apparent and measurable nature compared to the broader goal. Another substantial difference between the two groups of objectives is that while reaching the objectives is related to a particular intervention resulting from a concrete law or specific programs, the attaining of the goal is influenced by a much wider set of laws, programs or an aggregation of special interventions. Due to the different contents and role of the goal and objectives, there are essential differences in selecting and formulating indicators for their measurement. Indicators for measuring the goal are related to the general state-of-affairs and estimations of the country's competitiveness, ease of doing business, and administrative burden. The indicators identified in Table I represent an ideal set that might be modified in every concrete situation and country as per availability and reliability of statistical information. In a more uncertain situation it would be better to complement quantitative indicators with qualitative analysis mainly gathered from surveys, case studies, and interviews, as demonstrated in this report. I Table 1: Performance Indicators of the LARACEAA's EX·J.()..~t~...::.~_._,~ Objective Effect Type of Indicators Source of Information r--c:- To establish publicly justified limits 0 0 on administrative regulation and U Quantitative Indicators I A control of business and to raise the T ----~ -, L national competitiveness. C I. GDP growth rate NSI, World Bank 0 2. Competitiveness indices Doing Business, M 3. Ease of doing business indices WEF, IMD, OECD, E 4. Administrative burden indicators Standard Cost Model I- ----.-~- Qualitative Indieators , Perceptions of key stakeholders I Survey -- I on achievement of the goal 1. To protect free economic I initiative N Quantitative Indicators 2. To clearly outline limits of p administrative intervention in U 0 economic activity at central and T, L Regulatory burden National B local levels 2. Legal framework efficiency Statistical J 3. To restrict and further 0 3. Level of bureaucracy Institute, Business E reduce publicly unjustified U 4. Ease of doing business Environment and C burdening of economic activity T 5. Share of time spent in dealing with Enterprise T 4. To provide clear definition P regulations Performance I of the types of regimes regulating lJ 6. ,Financial expenses of the business Survey (BEEPS) V economic activity T, to cover administrative burden and World Bank E 5. To increase transparency 7. Share of firms identifYing Enterprise Survey, S in the introduction of regulatory & regulatory regimes as major Doing Business, regimes constraint OECD, CoM, MF, 6. To limit the informal R 8. Number of regulatory regimes National economy by reducing administrative E total and by type Assembly, burden on economic activity S 9. Share of informal economy Register of 7. To limit the enactment of U 10. Corruption level indices Regulatory new regulatory regimes (licensing L 11. Number of electronic services Regimes or registration) by imposing the T 12. Number of regulatory regimes with requirement for evidence of the S public registers necessity for such a regulation and 13. Number of abolished regulatory advance notification of affected regimes persons 14. Number of simplified regulatory 8. To eliminate normative regimes requirements likely to restrict 15. Number of Lt\s of implemented competition regulatory regimes 9. To reduce corruption by 16. Administration work transparency limiting the discretionary power of indices administration 17. State and municipal taxes collected to. To ensure publicity of the for business services work of administrative authorities in 18. Costs of regulation performing applying normative acts related to administration administrative regulation and 19. Number of employed in control of economic activity, as well administrative services. as of the motives for their change. Qualitative Indicators .-~ Perceptions of key stakeholders on Survey, Case achievement of the objectives. Studies, Interviews and Discussions . .. --'--.----~-------~. -~"~--~--- Source: Prepared by the authors. Outcome indicators The outcome indicators relate to the achievement of the goal. They concern the wider effects of the policy and go beyond the direct and immediate influence on target groups. They comprise long-tenn effects on the economy, social activities and ecology. Such indicators are as follows: (i) Indicators of economic impacts (GDP growth rate, indices of competitiveness, ease of doing business indices, administrative burden indicators); (ii) Indicators of social impacts (employment and labor markets, social involvement, indices of good state governance and administration, publicity and awareness, and civil control of the activity of public authorities); and (iii) Indicators of ecological impacts (regulatory regimes related to environmental protection and sustainable development). Depending on the logic of intervention, indicators for measuring the specific objectives can be grouped as follows: Input indicators These indicators provide information on the financial, human, material, organizational or regulatory resources necessary to implement the policy. This group of indicators includes, for example, costs of central and local administration involved in regulation, the number of people employed in administrative services, etc. Output indicators These indicators relate to the immediate results expected to be produced (or, services to be delivered) by implementing the policy. Such immediate results include: · number of abolished regulatory regimes; · number of simplified regulatory regimes; · number of regimes abolished at the municipal level; · number of implemented electronic services; · others. Results indicators These indicators reflect the immediate effects of policy on target groups, beneficiaries and those who are directly addressed by the policy. This group of indicators includes: · financial expenses paid by businesses to comply with regulations; · time spent by businesses to comply with regulations; · administrative burdens; · time needed to deliver administrative services to businesses; · others. 11 EX-POST IMPACT ASSESSMENT OF THE LARACEAA 3.1 Government Measures and Initiatives Since 2004, the Bulgarian Government has initiated a number of actions to modernize business regulation. However, these actions have had only partial effect and they have not guaranteed orderliness and stability of the process of creating a better regulatory environment. Undertaken initiatives in the area of Administrative and Regulatory Reforms can be systematized in the following groups: · Administrative and regulatory burden-reduction measures; · Institutional initiatives; · Conducted impact assessments, analyses and training; · Legislative initiatives. 3.1.1Administrative and Regulatory Burden-Reduction Measures According to the first annual report for the implementation of the Better Regulation Program for the period 2008-2010, a total of 25 administrative regimes were proposed for abolition and simplification until April 2009. In co-operation with the interested parties, another 17 administrative regimes have been identified to be abolished or simplified. To improve regulation at the local level, a review of introduced administrative regimes has been done as well. As a result, 167 municipal regimes were abolished within one year. Specific information about the status of the regimes under the Better Regulation Program and Implementation of the Measures under the Better Regulation Program by April 2009 can be found in Appendix 2 and Appendix 3. Accomplishments of the Better Regulation Program 2008-2010 on Abolition and Simplification ofAdministrative Regimes: Results regarding simplification and removal of unnecessary regulatory regimes are mixed. During the period under consideration, reviews have been done of administrative regimes and barriers to economic activity in cooperation with interested parties (employers' organizations, branch associations, etc.). As a result, a list of regimes for simplification and abolition has been drafted. On the approved list of 16 out of 17 identified administrative regimes, the CoM has adopted the simplification of twelve regimes and five regimes for abolition, but the national parliament has not yet approved these proposals. In addition, the "Registration of a commercial establishment" regime introduced illegally in 140 municipalities, was dropped in 110 of them by March 2009; and 30 municipalities continue to apply this regime. Two of the identified regimes shall not be simplified, since it is considered that they are related to stringent regulation. These regimes are "Licensing of activity as commodity exchange" and "Permission to organization on waste utilization." Another regime, "Licensing of operators of airport ground operations," will not be simplified, since consultations with the EC have confirmed the necessity of the regime. Three other regimes, including "Permit of performance of activities including collection, transportation, temporary storage, preliminary treatment, utilization and/or rendering harmless of waste," "Permit of performance of taxi transportation" and "Permit of performance of occasional transportation" are envisaged for consideration by the CoM. Consultations with business associations have been conducted, but more needs to be done. For the time being, only consultations with representatives of business associations have been used in identifYing regimes for further simplification. A more precise hands-on alternative method to this practice is the suggested analysis of the compliance of regimes with the main criteria stipulated by LARACEAA (see Appendix I). By applying this method, this study identified nine regimes that do not meet entirely the requirements of these criteria. This group includes the following regimes: customs agent activities; manufacturing of compact disks (optical disks) and/or matrices for them; industrial processing of tobacco and production of tobacco products; and production of alcohol, distillates and alcoholic beverages. This analysis may be very helpful in determining priority regimes to be considered and suggested for simplification in the future work of the Better Regulation Program. Limited number of alternative forms of regulation has been introduced. An alternative form of regulation was introduced in practice in early 2009, when the Ministry of Interior implemented a provision that road accident findings can be filled-in by citizens without the interference of police authorities. Another example is related to adoption of the Law on Independent Evaluators. 16 The regulation of the activity of independent evaluators has been transferred to a professional organization, the Chamber of Independent Evaluators. This action is part of a measure on transferring certain regulatory functions, such as license regimes, to branch organizations. The constituent assembly of the Chamber was held in March 2009. Licensing regimes slightly increased since 2003. In spite of undertaken measures, licensing regimes increased during the analyzed period from 39 to 42 (see Figure 2), which resulted from the implementation of five new regimes and the abolition of two regimes. Seven amendments and supplements have been made to six regimes throughout the period. Most intensive was the establishment of new regimes in 2009, when three regimes were implemented, while abolished regimes (one in a year) refer to 2004 and 2007, respectively (see Figure 3).17 16 Promulgated SG 981 November 14,2008. 17 In 2007, the Bulgarian Industrial Association has conducted a study on the illegal enforcement of regulatory 1 · {1' t · · (T t'prr:~ao 1-.. ........ t...~__"11 ft i Figure 2: Small number of licensingr!!I!!':!"=s amended since 2003 45 40 35 30 25 total number 20 · amended ~5 ~o 5 o 2003 2004 2005 2006 2007 2008 2009 Source: Authors' estimates, based on the amendments of the LARACEAA. Figure 3: A few licensing regimes introduced and very few abolished since 2004 3 2 new 1 II ... · abolished o 21 2005 2006 2°1 2008 2009 -1 Source: Authors' estimates, based on the amendments of the LARACEAA. Regarding the implementation of electronic services, analyses show that these may be an efficient tool for reducing administrative burdens. However, the practice in implementing electronic services has demonstrated weaknesses, as follows: · Services are developed according to the internal rules of individual institutions, making it difficult for them to become an integrated part of a single e-service environment. · Working processes of services are designed to be comfortable for the administration, not for the consumers; · There is a lack of a nation-wide model of rules for working with electronic documents. 190 registration regimes applied by the central administration and about 370 registration regimes by local administrations, whereas about 750 permission regimes were applied illegally by local administrations. However, . ,,- -~!-- ~4' l<>tnrv r~(Jjmes is lackimr. Therefore. this reoort uses information onlv about ro,,".. To overcome these weaknesses, the Government has undertaken the following steps: · The adopted Law on Electronic Governance (LEG)18 provides for automatization of administrative procedures, transparency of processes in state administration, reduction of possibilities for corruption as well as reduction of administration costs. LEG stipulates the single creation and multiple uses of data, the obligation for inter institutional exchange of e-documents, mutual compliance of information systems and information security. The Law also aims to reduce the time of delivering administrative services to citizens and business. The LEG has created grounds for a substantial reform in administration's use of new information technologies and joint use of hard-copy and electronic documents; · An integrated system of e-government is being built with the aim of providing a model for integrated e-governance at regional and central levels. The e-government portal has been created, www.el!ov.bg.This is the contact point for access to all e-services delivered by central administration. The system offers a centralized approach to managing documents, operation processes, contents and policies. A special chapter contains a catalogue of regulatory regimes by type; · A pilot integration system of electronic region (PISER) has been initiated which aims to build infrastructure for assisting the institutions in three regions (Bourgas, Dobrich and Stara Zagora) to more efficiently manage their activity and deliver administrative services electronically (see Box 1).Standardization of services and processes has been introduced to improve public access to administrative services. State authorities created a single place for access to administrative services on the principle of "one-stop shop." "One-stop shop" services have been introduced by 77 percent of central administration structures, 96 percent of regional and 82 percent of municipal administrations. 19 t Box 1: Establishment of a Pilot Integrated System of an Electronic Region In accordance with the project Pilot Integrated System of an Electronic Region (PISER). three electronic regions have been established in Burgas, Dobrich and Stara Zagora. The so-called "regional portals" are the basis of the project; they provide opportunities for citizens and business to electronically request and receive services, provided by their regional and municipal administrations. This opens a "door" toward an administration capable of operating 24 hours a day, 7 days a week. The developed program solution provides opportunities for the establishment of a connection between the different administrative services and the different sources of information on the basis of a standardized interface. On the three pilot regional portals, the citizen and business can frod information about 100 services provided by their regional administrations, accompanied by a detailed description of the normative framework, the procedures and execution terms as well as the necessary templates and forms. Each municipal administration included in the project provides five services via its regional portal. Over 200 transactions have been carried out between the start of the three regional projects in September 2006 and the end of March 2009. On average, the portals are visited by 350 users daily. Source: MSAAR (2009), 3.1.2 Institutional Initiatives The Council for Economic Growth (CEG) became an important consultative forum on Better Regulation. The CEG, established during the analyzed period and presided over by the Minister of Economy, became an important public-private consultative forum. The Council, together with experts from the Ministry of Economy, has developed measures for implementation of the principles of Better Regulation adopted by the CoM on August 3, 2006. 18 Promulgated SG 46, 12.06.2007 One of the key measures was the introduction of a clear relationship between the executive agencies and the business associations in the implementation of the Better Regulation Policy. The measures would introduce the practice of analyzing and monitoring-through ex-ante and ex-post regulatory impact assessments---Iegislative drafting and enforcement issues that would create problems for economic entities. 20 Close cooperation between the Bulgarian Government and the World Bank resulted in Bulgaria's recent progress in the area of regulatory reform. The World Bank supported the Bulgarian Government through analytical and advisory work in the regulatory reform area. The first joint World Bank and Ministry of Economy and Energy report analyzed administrative procedures in three sectors of the economy--tourism, food, and road transportation-calling for reduction and simplification of certain administrative regimes that are burdensome. It emphasized superfluous regulation at the municipality level as well. Another report, Bulgaria's Policy for Regulatory Reform in the European Union: Converging with Europe's Best Regulatory Environments, recommended a national nine-step strategy that was approved by the Council for Economic Policy on October 19, 2007. These two reports, and the consultation process with other line ministries, business associations and think tanks, actually paved the way for the Better Regulation Program 2008-20 I 0, approved by the Bulgarian Government in April 2008. Another World Bank report from June 2009 called for a systematic, fair, and transparent regime of state fees. The report noted that there is no policy in place regarding the setting of state fees; this is one reason for the "wild" development of tariffs that include state fees, additionally burdening business, especially small and medium businesses. The report further indicated that the legal framework for the regime of state fees is insufficient, and there is weak institutional framework to monitor the setting and approval of state fees. Implementation of key recommendations is yet to be seen. Better Regulation Unit was created. The Better Regulation Program 2008-20 I 0 provided for establishment of the Better Regulation Unit, which was also advised by the World Bank. With amendments to the Rules and Procedures of the CoM and its administration, adopted in February 2009,21 the Strategic Planning and Management Directorate assumed the functions of coordinating the implementation and reporting of the Better Regulation Program, and the Directorate began to execute the functions of a "Better Regulation Unit." Few months later, after the new government came in power, the new Rules and Procedures of the CoM and its administration assigned these functions to the CoM's Economic and Social Policy Directorate, as of October 2009. A second review of the Program is forthcoming with the purpose of taking into account the new realities and new governmental priorities. Internet portal for consultation was launched by CoM Administration. Responding to the needs and the understanding that the dialogue with stakeholders is of key importance for the successful implementation of most of the measures in the Better Regulation Program, immediately after the adoption of the Better Regulation Program an internet portal was launched for public consultations: \Vwvv.strategv.bg. The requirement was adopted for all draft legislation related to administrative regulations to be uploaded to the site at least 30 days before their inclusion in the agenda of a meeting of the CoM. Even before the internet portal for consultations, an Administrative Register was established. Before the portal, a Register of Administrative Structures and Acts of the Public Authorities has been created. 22 Although still accessible, this Register is no longer updated. Another newly established Register (w\~'Y.egov.bg) has been developed, as mentioned above. It is much better organized technically, but there are many issues in terms of its updating. 20 For more information about the role of the CEO and other policy initiatives. see World Bank (2008) or Policy Note on Private Sector Development in World Bank (20 lOb). -. , no. __ ..l,,_~~ ~~rI it~ "r\mini'ltration. SG. No. 10/2009. The new Government maintained the reform. An Administrative Reform Council was set up to deal with Administrative Reform, including reduction of the administrative burden. An Administrative Reform Council has been established by CoM decision in August 2009?3 The Council is headed by the Deputy Prime Minister and Minister of Finance, and the Deputy of the Council is the Minister of Labor and Social Policy. In November 2009, the Government adopted a Regulation on the organization of the activity of the Council. The goals of the Administrative Reform Council are to: (i) contribute to the governmental policy on strengthening and developing the public administration; (ii) propose strategic directions; and (iii) coordinate draft regulatory acts on establishment, reorganization and termination of administrative structures, administrative reform at local and district levels, administrative services, e-government, status of civil servants and human resource management in the public administration. The new Bulgarian Government continued cooperation with the World Bank in the area of regulatory reform. The CoM Administration continued working with the World Bank on a study to analyze administrative and regulatory barriers to business. The report will come out in July 20 I 0 and is based on a survey of over 300 firms in Bulgaria; it has been commissioned by the Bulgarian counterpart, using a survey methodology devised by the World Bank.24 3.1.3 Conducted Impact Assessments, Analyses and Trainings EU supported the Better Regulation Agenda in Bulgaria through funding an initiative by the CoM Administration. Through Operational Program Administrative Capacity, EUR 1.25 million have been granted to the CoM's "Better Regulation Unit" to perform 14 regulatory impact assessments,zs Within the framework of this project a methodology for performance of legislative and strategic impact assessment was elaborated and adopted by the CoM,z6 Training sessions also started for the experts from the Directorate and from the central and territorial administration units. Gained knowledge and skills will help the experts from CoM's Economic and Social Policy Directorate to provide methodological assistance to their colleagues from the public institutions to carry out impact assessments.27 The Ministry of Economy and Energy also supported the Better Regulation Agenda through a pilot study. A consultancy consortium conducted a review of the national legislation for the Ministry of Economy and Energy between August 2008 and May 2009 (2009b). It identified 398 obligations for provision of information, stated in 33 laws and respective secondary legislation. The total administrative costs of these obligations are calculated at EUR 81 million and the administrative burden was calculated at EUR 51.5 million, or 64 percent of the administrative costs. The project consultants proposed a reduction of 136 obligations for provision of information that would save business approximately EUR 13 million. This represents a reduction of the administrative burden by 25 percent for the provision of information. Almost all of this reduction--nearly 24 percent of the 25 percent 23 See Decree N~ 192 from 5 August 2009. 24 The World Bank reports are publicly available at \'lww.worldbank.bg. 25 Seven ex-post impact assessments have been conducted through consultancy work on the Investments Promotion Act, the Waste Management Act, the Child Protection Act, the Law on Drugs in Human Medicine, the State Fees Act, the Local Taxes and Fees Act, and the Social Assistance Act. Another seven ex-ante impact assessments have been conducted through consultancy work on the draft Act on Amendment and Supplement (AAS) of the Law on Measurements, the draft AAS oflnvestments Promotion Act, the draft AAS of the Waste Management Act, the draft AAS of the Law on Foods, the draft Act on Hydro-meliorations and Irrigation Agriculture; the draft of AAS of the Law on Health Institutions, and the draft Law on Public Libraries. 26 Jacobs &Associates and Institute of Market Economics (2009a). 27 . I total-would result from the reduction of administrative burdens imposed by five acts: Law on Private Security Activity, Public Health Act, Protection of Agricultural Lands Act, Law on Tobacco and Tobacco Products, and the Social Insurance Act. 3.1.4 Legislative Initiatives District Governors have been given additional powers to ensure that municipal regulations conform with the LARACEAA. District Governors have undertaken several initiatives in that regard, mainly in terms of repealing municipal regulations and sending them before the Administrative court. Reforms in the judicial system were initiated. With the adoption of the Commercial Register Act 28 and the Act on Amendment and Supplement to the Commercial Act,29 regarding trade representatives and insolvency procedures, the legal and the institutional frameworks have been established for the reforms in the judicial system. With the implementation of these measures, the procedure on registration of traders became easier, quicker and cheaper. In addition, a draft Act on Normative Acts has been prepared. After its adoption, the process of impact assessment in the public administration will be institutionalized. 3.2 Status and Dynamics ofQuantitative Indicators 30 3.2.1 Outcome Indicators Studies by the World Economic Forum (WEF) and the Institute for Management Development (IMD) are used to determine Bulgaria's international competitiveness. Within the studies conducted by WEF, Bulgaria is featured throughout the entire examined period, while the comparative data from the IMD included Bulgaria since 2006. Due to the constantly changing number of countries included in those studies, Bulgaria's ranking is represented in two ways. The first way is in accordance with the absolute spot the country occupies during each year in comparison to other countries. The second way, entitled relative spot ranking, is based on a calculation of the spot the country would have taken if the number of participants included for the purposes of comparison were 100. This allows for a more precise comparison of the country's dynamics during the examined period. Bulgaria's competitiveness is low as per WEF's ranking by both absolute and relative spot. Bulgaria's absolute ranking is between the 70th and 80th position, while the relative ranking varies around the median (see Figure 4). Subsequent to a notable improvement of the competitiveness during the period 2004-05, the dynamic of the development of this index is negative because of the subsequent worsening of the absolute and relative ranks. 28 SO. No34/ on April 25, 2006, amended, SO, N0441 on June 12,2009. 29 SO, No381 on May 9, 2006. 30 The following quantitative analysis of the period after 2003 uses the performance indicators that were specified . ~., · r ...· :.. -1;n~fnr" not analvzed because of the lack of reliable data. LFigure 4: B~I~~ria's Global Competitiveness Index ranking isl()~,_~!,~!,~~_!,!!~~()ving_ 90 80 70 60 50 rank 40 -II- relative rank 30 20 10 o 2004 2005 2006 2007 2008 2009 Source: Global Competitiveness Report (WEF, 2004-2009). I Figure 5: Bulgaria's ranking by the Competitiveness Index of!~~~s_li_g_htly _.i,:!,pr('>\lE!d 90 80 70 · · 60 · 50 . · ~ rank 40 -II- relative rank 30 20 10 0 2006 2007 2008 2009 Source: World Competitiveness Yearbook (IMO, 2006-2009). The IMD data shows the country is slightly improving. Bulgaria ranks behveen the 67th and 77th place among the 100 countries as per IMD studies (see Figure 5). The development dynamic of this index, however, is favourable both with regard to absolute and relative ranking. With every passing year the country improves its position and moves closer to the average group. Improvements in Bulgaria's business environment are also noted in the "Doing Business" index. Bulgaria has achieved substantial progress over the past five years with respect to its Doing Business rankings. Although there have been some areas where Bulgaria's relative positions have stayed the same (e.g., protecting investors) or even worsened (e.g., number of procedures and time to get a construction permit), Bulgaria has improved in many areas (see Table 2:). For example, reductions in the number of procedures, the time to register, the cost of registration, and the minimum capital requirement have made starting a business considerably easier since 2004. Similarly, the total tax rate and the number of tax oavment~ hllVP hppn Table 2: Improvement of Bulgaria's Doing Business Ranking Since 2004 ID~ .., r-------~-- Starting a Business Procedures (number) 4 Time (days) 32 18 Cost (% of income per capita) 10.4 1.7 _~_~_______ ~ _ _~'1in. capital (% of income per capital_~_ 86.7 20.7 Dealing with Construction Procedures (number) 20 24 Permits Time (days) 127 139 Cost (% of income per capita) _ _ _ _+ _____-+-_436.5 475.2 Registering Property Procedures (number) 9 8 Time (days) 19 15 Cost (% of property value) Getting Credit Strength of legal rights index (0-10) Depth of credit information index (0-6) Public registry coverage (% of adults) Private bureau coverage (% of adults) _~-+__ Protecting Investors Extent of disclosure index (0- 10) 10 10 Extent of director liability index (0-10) I 1 Ease of shareholder suits index (0-10) 7 7 Strength of investor protection index (0-1 O)-+-_ 6 -6 - - - Payments (number per year) 31 17 Time (hours per year) 616 616 Total tax rate (% profit) 46 31.4 Trading Across Borders Documents to export (number) 7 5 Time to export (days) 26 23 Cost to export (US$ per container) 1233 1551 Documents to import (number) 10 7 Time to import (days) 25 21 ~ _ _ _ ~~_. _ _ Cost to import (US$ per container) 1201 1666 -~-- Enforcing Contracts Procedures (number) 40 39 Time (days) 564 564 Closing a Business Cost (% of claim) Recovery rate (cents on the dollar) Time (years) Cost 33.8 3.3 9 23.8 3.3 Source: Doing Business 2004-2010 (World Bank), Table adopted from World Bank (2010a). 9 3U With regard to relative ranking, Bulgaria ranks close to the first quartile in the Doing Business index. The Doing Business index dynamic is positive, and during the last two examined years the country ranks in the first quartile with regard to relative ranking (see Figure 6). In 2007 Bulgaria ranked among the top 10 reformers with regard to the improvement of conditions for doing business, although the country was ranked 46th. In 2009 the country was not a top reformer but it was ranked 51st (see Figure 7), ahead of Hungary, Romania, Poland, Italy, Czech Rep. and Greece. Of the new EU member countries, Latvia, Lithuania, Estonia, Slovakia and Slovenia ranked higher than Bulgaria. The improvements in the area of regulation have continued. For example, since the most recent Doing Business 2010, which includes improvements through June 2009, the new government has reduced minimal paid-in capital for limited liability companies to EUR I from EUR 2,500. This emphasizes the potential for continued improvement along a number of dimensions. 70 60 50 40 rank 30 ___ relative rank 20 10 o 2006 2007 2008 2009 2010 Source: Doing Business Report (World Bank, 2006-2010). Note: This ranking does not incorporate the recent changes in the Doing Business methodology. I Figure 7: Bulgaria takes 51st position as per Doing Business 2010 ranking - - ..-- -~-~-- ,,-,~,-~ ~----,,-.- ~-.~-- ~----,-.~-~.--- .-"~-.~--.----,,--------- --~.----.----~.-~.,--- -, --~-~.--.--~~.~-- .. 97 100 82 80 60 48 1 51 52 54 73 76 40 42 43 40 31 33 35 26 27 28 29 17 18 21 22 20 4 6 8 11 0 ::.:: ~ v v ,~ c >- E l"J l"J CJ V1 l"J <;; V1 l"J C ~ C l"J >- l"J v 2::- ci. CJ ::l C C CJ C ;;; W v '5 :J ..",. e ;:: l- e e u '" E l"J l"J C 0 v CJ l"J :J 'oc C l"J l"J C ;:: l"J .3 V1 QC c.. '" >- > ::l 0 a. l"J QC CJ l"J OJ '" '" .3 cr: CJ CJ CJ ~ e E Vl .Ef c > E (3 -' ::l ' e ..n ;; I- "6 5 -' u.. -.::: ~ I- u 0 ..0 0 c.. ..c " :J CJ u.. w Vl CJ d) CJ ..c 0 c.. Vi E Vi d5 ::::: cr: 0 u CJ 0 " -' CJ N ~ X :J U Z -' Source: Doing Business 2010 (World Bank, 2009). Note; This ranking does incorporate the change in the DB2010 methodology. In terms of product market regulation, Bulgaria demonstrates a good standing compared to the EU average. Using the methodology developed by OECD experts for measuring regulation of the product market, a World Bank team conducted a study on Bulgaria. It found that in 2006 the country received a mark of 1.8, which ranks it between the Czech Republic and Hungary (see Figure 8). Bulgaria still lags behind the average level of this indicator among the 15 EU member-countries and of the OECD countries, which have been represented by 2003 data. Figure 8: Bulgaria's Product Market Regulation Index compares well with EU-average 3.0 2.8 2.5 2.0 1.5 1.0 0.5 0.0 Slovak EU15, OECD, Romania, Czech Bulgaria, Hungary, Other Poland, Republic, 3002 2003 2006 Republic, 2006 2003 MICs, 2003 2003 2003 2003 Source: World Bank (2007). The World Bank Enterprise Survey conducted in 2009 indicates that Bulgarian managers do not rate requirements for licenses and permits among the most significant constraint to their businesses. The biggest problems for Bulgarian firms are access to finance, as shown in more than 17 percent of the answers, and the presence of the informal economy, as shown in more than 15 percent of the answers (see Figure 9). Licenses and permits were cited as obstacles in only 5.37 percent of the answers in 2007 and 2.09 percent of the answers in 2009. 31 Figure 9: Bulgarian Firms do not rate Business Licensing and Permits as one of the top constraints in 2009 (in percent) Top 10 business environment constraints for firms 20 17,19 18 15,25 16 13,28 12,81 14 12 10 8 i I ···· 6 4,58 3,76 3,42 3,24 4 2 o s CLI ... c: o VI c: c: VI U c: S >.f; u :: ''-:;; ... 0 o <=l VI ttl VI ~ n()()!U)Q\ · The public consultations portal is located at \Vw\v.strategv.hg. All proposals for statutory instruments relating to administrative regulation must be published on this portal at least 30 days prior to their submission to a CoM session for approval; · A newly created register, which presents all regulatory regimes, has been established at the following address: w\\\'v.egov.hg; · 398 information obligations have been identified, which have been specified in 33 national laws and the accompanying secondary legislation. Recommendations have been formulated for amendments to five laws, which generate 80 percent of the administrative burden relating to information provisions; · OPAC has financed projects for conducting 14 assessments (seven ex-ante and seven ex post assessments) of the regulatory impact of important legislative acts and the work on a report on the institutionalization of impact assessment. In addition, more than 250 officials from the state administration have been trained in conducting impact assessments. 3.2.3 Results Indicators Several indices that most accurately reflect regulatory conditions have been selected from the WEF competitiveness studies. These are the indicators of the regulatory burden, the effectiveness of the legislative framework and the transparency of policy-making. On these indices, Bulgaria scores between 2.3 and 3.3-with the desired score being the closest possible to zero (see, Figure 11). From a dynamic standpoint, the transparency of policy-making34 reflects worsening of the condition in Bulgaria, although the effectiveness of the legislative framework keeps the same position. Only the regulatory burden indicator reflects dynamic improvement. For this reason, the regulatory burden is ranked first, while transparency receives the lowest mark (see Figure II). By these indices Bulgaria falls within the least favorable range of the rankings: between 80th and 120th place (see Figure 12). With respect to relative ranking, Bulgaria falls within the second, less favorable half of the ranking-~after the 60th place. The same position of the selected indicators is taken both by points and by place within the rankings. By all of the analyzed indicators the country is in a less favorable position of the total competitiveness index. Several indices, which most accurately characterize the dynamics and state of regulation, have also been selected from the competitiveness studies of the IMD (see Figure 13). These are the indicators of bureaucracy, ease of doing business and registration of a company (starting a business). Of these, the index on the impact of bureaucracy reflects the best condition for Bulgaria. The other two indices have values for Bulgaria that fall within the unfavorable part of the graph, fluctuating through the years between 3.7 and 6, given that the maximum value is 7. From a dynamic standpoint, only the index for registration of a firm shows a degree of improvement over the period from 2006 to 2009, as its value is better at the end of the period than at the beginning. The other two indices are worsening a little bit (see Figure 13). 34 The problem with transparency of policy-making is also confirmed by the 2009 ARC survey. Over half of A. 00 ~1lt"/t)'\! ct;\lrl that rpcrulatl"nc !:'irp !lnntipA lni"Ancictpntl" o::lnrl . Figure 11: Decreasing values of WEF's Burden of Government Regulation and Efficiency of Legal , Framework since 2003 and Transparency of Government Policymaking since 2007 ."~ -.---~~~""-~----~---~-"--. " ~~~~-.,-----~-."~""-~~~~--,---, 4 3 2 o 2003 2004 2005 2006 2007 2008 2009 Burden of government regulation ___ Efficiency of legal framework Transparency of government policvmaking Source: Global Competitiveness Report (WEF, 2003-2009). Regarding Bulgaria's ranking according to the individual indicators, from a dynamic standpoint the country ranks highest with respect to doing business, both in terms of absolute and relative positioning (see Figure 14). Concerning the bureaucracy, the tendency is positive, while in the case of registering a new company, the graph shows an elliptical trajectory and the end values for the period equal the beginning values (see Figure 14). I Figure 12: Bulgaria's Burden of Regulation is falling as per WEF relative ranking, while Bulgaria's Efficiency of Legal ._r ___,___ ,,_._,____ __and Transparency___'" _____ ____ ·. _.____._are somewhat constant___ Framework ___"__ ____ ,_. __ #~ _ _ ~~ _ _ _ _ _ _ _ _ ·~_'" _ _ _ _ __ , _____ ~,~ of Policymaking _ ~ ~_, ,~_,-"", ,~ ________ __ ",,__ _~ ~ __ __~_~ ~_._._~_~ ,~ 120 100 80 60 40 20 o 2003 2004 2005 2006 2007 2008 2009 -+-8 urden of regulation - rank ___ Burden of regulation - relative rank ....... Efficiency of legal framework - rank ....... Efficiency of legal framework - relative rank Trans parency of policy-making - rank Transparency of policy-making - relative rank Source: Global Competitiveness Report (WEF, 2003-2009). Figure 13: IMD Indices for Bulgaria of Bureaucracy, Ease of Doing Business and Starting a Business are somewhat similar in 2009 compared to 2006 7 6 4 3 o 2006 2007 2008 2009 -Bureaucracy - Eas e of doing bus ine; 5 S rarting a business Source: World Competitiveness Yearbook (IMD, 2006-2009). I ~i~~~:::: IMD's Bulgaria Ranking of Bureaucracy is Worse Than Starting a Business and Ease of Doing 100 90 80 70 60 40 50 ~---il-i-- ~~--==--------------~. 30 20 10 o 2.006 2007 2008 2009 _ _ Bureaucracy - rank ___ Bureaucracy· relarive rank -+- E as e of doing bus ines 5 · rank ....- E as e of doing bus ines s · relative rank 5 ra rting a bus ines s - ra nk Starting a business relative rank Source: World Competitiveness Yearbook (IMD, 2006-2009). A valuable indicator of the regulatory burden is the share of time that senior managers report spending on activities relating to regulations. While in 2002 such activities took up 3 .... _c ~~~;Ar n'l2 i 2. Replacement oflicense with registration regime. Law on MAF Simplified. Licensing of carriers Amendments to Art. 165 of the Law on the veterinar Dran amendment law on the for transportation of veterinary activity are envisaged. Para. 1, b. 2 and yactivity Law on the veterinary animals 4, requiring provision of documents that the activity approved by CoM administrative authority is also obliged to dispose with Decision X2699 from with, have been abolished. By shifting towards 06.11.2008. The regime has registration regime, the administrative authority been simplified as described has no option to refuse the activity execution on in column 2. expedience any more, and, according to Art. 14, The draft amendment law para.l of the Limiting Administrative Regulation was submitted to the and Administrative Control on Economic Activity National Assembly on Act, it will be obliged to give permission for this 07.11.2008 activity provided that the normative requirements I reading on 12.03.2009 have been fulfilled. Stage - discussion Published on the Public consultations website: \\~I~.\\SIJ.1!~l:.l. bg ! 3. Replacement of license with registration regime. Law on MAF Simplified. Licensing of It is envisaged to make an amendment in Art. 364 veterinar Draft amendment law on the wholesale trade with of the Law on veterinary activity. By shifting yactivity Law on the veterinary veterinary medical towards a registration regime, the administrative activity approved by CoM products authority has no option to refuse the activity with Decision N2699 from execution on expedience any more, and, according 06.11.2008. The regime has to Art. 14, para. 1 of the Limiting Administrative been simplified as described Regulation and Administrative Control on in column 2. Economic Activity Act, it will be obliged to give The draft amendment law permission for this activity provided that the was submitted to the normative requirements have been fulfilled. National Assembly on 07.11.2008 I reading on 12.03.2009 Stage - discussion Published on the Public consultations website: 1\ 1\\V.strate,,\ .b>2 4. Replacement of the licence with registration Law on MAF Simplified. Licensing of regime.It is envisaged to make an amendment in veterinar Draft amendment law on the wholesale trade with Art. 375 ofthe Law on veterinary activity. By yactivity Law on the veterinary veterinary medical introducing registration regime, the administrative activity approved by CoM products authority has no option to refuse the activity with Decision X!699 from execution on expedience any more, and, according 06.11.2008. The regime has to Art. 14, para.l of the Limiting Administrative been simplified as described Regulation and Administrative Control on in column 2. Economic Activity Act, it will be obliged to give The draft amendment law permission for this activity provided that the was submitted to the normative requirements have been fulfilled. National Assembly on 07.11.2008 I reading on 12.03.2009 Res Regimes under pon Simplification Procedure Law Status Facilitation sibility of Published on the Public consultations website: \\-'-L'\.slnlh::g\ .bg 5. It is envisaged to prepare a draft amendment law of Law on MEYSI Simplified. Lieense for the Law on voeational education and training that vocationa MLSP With Decision .N'd16 from vocational education will provide for revision and facilitation of the I 26.02.2009. Ha The CoM has and vocational procedures for licensing of vocational education education approved a draft amendment orientation centers and information and professional and Law on vocational education orientation centers, as well as for revision and training and training. The changes facilitation of the application forms for both envisage a simplification of procedures. the license issuing procedure. It is also envisaged to amend the lieense of The requirement for the vocational education centers and information and managing committee of professional orientation centers fee tariff, colleeted NA VET to pass judgment on by the National agency for professional education the issuing ofthe license is and training. The administrative regime will be abolished, sinee the director facilitated by introduction of two new steps in the of NAVET passes judgment tariff at the stage of candidate's proposal on that. The deadline for evaluation (at the start of the proeedure) ~ fees for passing judgment is candidates with one profession and for candidates decreased from 4 to 3 with 2 to 6 professions. months. A regulated deadline for dealing with incompleteness of the documents is envisaged. Thc proccdure for issuing of licenses or license refusal will be amended. It is envisaged to establish a register oflieenses issued. The draft amendment law was submitted to the National Assembly on 27.03.2009 I reading on 27.03.2009 Stage - discussion Published on the Public consultations website: I I\WI\ .strate n v. bl! 6. The amendments in the Law on waste management Law on MOEW Envisaged for Permit of envisage: waste consideration. performance of I. Excluding from the permission regime the most managem I.Draft amendment law acti vities including often demanded permissions for performing ent prepared. colleetion, aetivities with dangerous waste, namely their 2. The ehange in the transportation, temporary storage on the place of origin. administrative regime ~ temporary storage, 2. Shortening by Yz the deadlines* for coneerting approval of the programs for preliminary the Programs for waste management aetivities waste management is treatment, utilization new paragraphs 7, 8 and 9 have been created in included in the draft and/or rendering Art.30 that set up those shorter deadlines. amendment Law on Waste harmless of waste * At present the deadline is 30 days. Management 3. Reduction by 30 days of the overall duration of The draft amendment law attaining approval for the Company waste activity on the Law on waste programs, and in case of a single return for missing management is included in details completion - to maximum 75 days: the Legislative Program of A removal of a stipUlation currently in force has the CoM for considerAtion been proposed (Art.30, para. 4 - "The director of on 25.06.2009 the regional inspectorate for environment and waters, on which territory is the seat of the persons as per the commercial register, shall approve the draft program after receiving statements about their co-ordination by the regional inspectorates for environment and waters, on which territory the activities are implemented.") Ex-Post Assessment of the LARACEAA APENDIX 2 Res Regimes under pon Simptification Procedure Law Status Facilitation sibility or 7. MOEW Position: "The waste management Law on MOEW No changes. Permit of organisations are specific legal entities that have waste MOEW does not envisage organization on some modalities with regard to other commercial managem abolition of the permission uti lization entities. First, they accumulate public funds ceded ent regime by the government. Second, they are non-profit. Third, they are allowed to spend the accumulated funds only on specific purpose and are subject to annual auditing for this. Hence they have to remain on permission regime." 8. The amendments on the Law on plants protection Law on MAF No changes. Licensing of persons as of28.03.2006 with regard to the permission plants who import, sell. regime are in contradiction with the LARACEAA protectio MAF does not envisage pack and wrap since the permission is issued for each separate n abolition of the permission products for plant deal or activity, while substantially this is a regime for pcrsous who protection with registration regime. import, sell, park and wrap commercial purpose In the period 2008-2010, no facilitation of the products for plant protection or perform plant permission regime for trade and re-packaging of or perform plant protection protection services plant protection products is envisaged. The regime services. for performing plant protection services has The regime for providing already been abolished. plant protection services has been abolished. Promulgated. SG, issue 26/2006 ! 9. Shift towards approval of objects in line with the Law on MAFI Simplified. Registration of sites stipulations under Regulation 1774/2002IEO. The veterinar MOEW Draft amendment law on the for rendering approval procedure is described in Art. A29, para. yactivity Law on the veterinary harmless of animal 2, which refers to the approval procedure under activity approved by CoM side products and Art. 228, para. 2-7. The regime is facilitated by with Decision X!699 from sub-products introducing a significant reduction of the approval 06.11.2008. The regime has deadlines. been simplified as described in column 2. The draft amendment law was submitted to the National Assembly on 07.11.2008 I reading on 12.03.2009 Stage - discussion Published on thc Public consultations website: \\ \\\\. strategy. bl! 10. A draft Ordinance on amendment ofthe Order on Law on MRDPW Simplified. Permits of persons essential requirements for buildings under products CoM Ordinance Xl! 225 for conformity construction and for assessment of building technical from 10.09.2008 assessment of materials' compliancc is prepared. requirem Simplification and construction products The amendments are related to the reduction of the ents amendment to the Order on number of documents required as well as of the essential requirements for deadline for issuing permission based on buildings undcr construction compliance assessment, in case the candidate and for assessment of provides copies of validated certificates for building materials' accreditation for the same scope of products. compliance. standards, and competencies as the ones it applies i for. I 11. An amendment in the Law on road transport is Law on MTITC Envisaged for Permit of occasional envisaged aimed at making more precise the texts road Consideration transportation requiring administration approval for casual bus transport Draft amendment law is transport. Yet, the measure will be preserved on its prepared. Meeting of MTITC whole. with stakeholders is conducted, agreement has not been reached. Forthcoming inclusion into the Legislative Program of e APPENDICES Res Regimes under pon Simplification Procedure Law Status Facilitation sibility of 12. According to a draft Law on amendment of the Law on MTITC Envisaged for Pennit of taxi Law on road transport, the registration will no road Consideration transportation longer be under responsibility of the Ministry of transport Draft amendment law Transport, respectively the "Road Administration" prepared. Meeting of MTITC Executive Agency; it will be carried out by the with stakeholders conducted, correspondent municipalities (upon issuance of agreement has not been permission). Thus, the Municipality Council will reached. locally define the number of taxi vehicles as well Forthcoming inclusion into as the tenns and conditions for their operation. the Legislative Program of the CoM. 13. The draft Law on amendment of the Law on Law on State Abolished. Categorization of tourism introduces amendments in Art. 50. para.2 tourism Agency With Decision .N'247 from tourist sites that aim to abolish the categorisation of the of 29.01. 2009 establishments for catering and entertainment. Tourism of CoM the regime for categorization of establishments for catering apart from shelter spots has been abolished The draft amendment law was submitted to the National Assembly on 30.01.2009 I reading on 12.03.2009 Stage - discussion 14. The draft Law on independent evaluators envisages Law on MEET Simplified. Licensing of expert replacement of the existing license regime with a independ Decision .N'!!462 from evaluators of registration one, and the regulation of the ent 15.07.2008 of CoM. different types of independent evaluators to be carried out by a evaluator This regime is transferred for assets professional association the Chamber of s self-regulation by a branch independent evaluators. association. The draft amendment law was submitted to the National Assembly on 16.07.2008 Approved on 30.10.2008 Promulgated in SG issue 98/2008 15. Position ofMT: After consultations with the EC on Law on MTITC No changes. Licensing of issues regarding the access to ground services civil MT does not envisage operators of airport market it has been clarified that at present it is not aviation consideration of this regime ground operations possible to remove the license of ground service operators. Hence it is necessary to consider the possibility provided by Directive 96/67, according to which the General Directorate "Civil Aviation Administration" gives approval before the ground service supplier starts operating on a certain airport market. Such an approval will be issued under clear criteria as stipulated by Directive 96/67, and will be related to its principles according to Art. 14, para. 1 of the Directive. 16. Unlawful regime contradicting Art. 14, para. 10f Municipa MSAAR The regime has been Registration of a the Limiting Administrative Regulation and I administrated by 140 commercial Administrative Control on Economic Activity Act. ordinance municipalities by April 2008. establishment s By March 2009 the regime is abolished in 110 I municipalities in Bulgaria. Source: Authors' research, as of January 2010. Appendix 3: Implementation ofthe Measures Under the Better Regulation Program (2008-10), as ofApril 2009 Operative Goals and Measures Term Responsibility of GOAL 1. ABOLITION AND SIMPLIFICATION OF THE ADMINISTRATIVE REGIMES Measure 1.1. Abolishing regimes recommended by business in compliance with the Appendix: - decision of the Council of Ministers for the abolition or simplification of regimes CoM preparation of the necessary amendments to the statutory instruments MEET, branch ministries Measure 1.2. Conducting systemic evaluations of the administrative regimes and of CoM, branch ministries the administrative boundaries before the realization of commercial activities in cooperation with the stakeholders (employee organizations, branch associations and other). Measure 1.3. Examination, nrl'·n"r!lt.nn and implementation of alternative forms of CoM, branch ministries, regulating economic and social partners, NAMRB Measure 1.4. Legislative order and part the functions re CoM,MEET, regulation of commercial activities to the unions on the basis of tender procedures branch ministries Measure 1.5. Submitting a recommendation to the Council of Ministers for MEET,CoM decreasing the unnecessary administrative burden on business, stemming from the information provision requirement under the existing national legislation, which is not engaged in the implementation of the European legislation Mf~aSlllre 1.6. Integrating services in accordance with the "life episodes" and "business events" principles with the aim of simplifying the access and provision complex services. - determining a portfolio of electronic services with high public value MSAAR ~~,'UU"b the areas of integration of electronic services and setting criteria for their MSAAR integration - improving the functionality of the e-government portal MSAAR preparing and Implementing mt,~grate:d services Branch ministies, MSAAR single provision of information to the administration by citizens and business 2008 All administrative structures Measure l. 7. Improving the quality of administrative services - control and administrative responsibility in cases of non-adherence to Directors of administrative administrative servicing deadlines; structures; administrative - broadening the scope action of the "silent consent" principle; Directors of administrative structures stn~ngtnenmg the control by the regional director over the law-abidance of the CoM, MSAAR I Ul'\.UU"'pu, council acts relating to the implementation of the administrative regimes; APPENDICES Operative Goals and Measures Term Responsibility of - introducing an evaluation of the work of employees responsible for applying the 12.2008 MSAAR,CoM regulatory policy. Measure 1.8. Ensuring the transfer of databases and installation of integrated 2008-2010 MSAAR information systems GOAL 2. ESTABLISHMENT AND CONSOLIDATION OF THE INSTITUTIONAL STRUCTURE FOR THE APPLICATION AND CONTROL OF BETTER REGULATION POLICY Measure 2.1. Establishing and consolidating the capacity of a Better Regulation Unit within the administration ofthe Council of Ministers - structuring the unit and determining its functions 06.2008 CoM - training experts from the Unit in the implementation of methodological 06-11.2008 CoM,MSAAR management of the ministries during impact assessment X - improving the coordination of the Better Regulation Unit with the civil society 06.2008 CoM structures, forming sectoral working groups, which include representatives of business organizations; X Measure 2.2. Determining the functions of the central administrations of executive 06.2008 CoM, branch ministries, authorities in relation to the implementation of the better regulation policy and state agencies, executive impact assessment X agencies Measure 2.3. Implementing impact assessment of statutory instruments. 1-working out a methodology for conducting a preliminary (ex-ante) incomplete Until 12.2008 CoM, MEET, MSAAR, impact assessment X MF, MLSP, MOEW, MJ - working out a methodology for conducting a complete preliminary (ex-ante) Until 12.2008 CoM. MEET, MSAAR impact assessment of drafts of statutory instruments X MF. MLSP, MOEW, MJ !- setting criteria for selection of drafts of statutory instruments. for which complete 12.2008 CoM, MEET, MSAAR preliminary impact assessments are conducted as well as of an order and conditions X MF, MLSP, MOEW, MJ for planning such assessments in the course of developing the legislative program iofthe CoM. - amendments to the Limiting Administrative Regulation and Administrative 12.2008 CoM. MJ Control on Economic Activity Act (toward improving the control mechanism and others), the Law on Statutory Instruments (toward implementing a mandatory preliminary impact assessment), the Structural statute-book of the Council of X Ministers and its administration (aimed to determine the functions of the Better Regulation Unit in relation to the applieation of the better regulation policy), the Law on Administration. etc. - initiating the implementation of the preliminary (ex-ante) impact assessments As of 04.2008 CoM, branch ministries - initiating the implementation of mandatory impact assessments in accordance As of 01. 2009 CoM, branch ministries with the developed criteria and methodology ·- conducting follow-up (ex-post) impact assessment As of 09.2009 CoM, branch ministries Measure 2.4. Building knowledge and skills in the administration regarding the facilitation of impact assessment of drafts of normative acts - developing a training program in accordance with the methodology for conducting Until 12.2008 CoM, MEET, MSAAR impact assessment and IPAEI Ex-Post Assessment of the AlARACEAA APENDIX 3 Operative Goals and Measures Term Responsibility of - conducting training of trainers As of 12.200 CoM, MEET, MSAAR X and IPAEl - conducting training of officials from the administration As of 0 1.2009 CoM, MEET, MSAAR X and IPAE! Measure 2.5. IntensifYing control and accountability - introducing the requirement for statutory instrument drafts which introduce As of 0 1.2009 CoM administrative regimes and regulate their facilitation shall be submitted to the Council of Ministers after preliminary consulting with stakeholders and the Better Regulation Unit and shall be accompanied by a mandatory ex-ante impact assessment. creating an Administrative register - provision of actual and accurate information 09.2008 IMSAAR regarding the existing regulatory regimes and administrative services; X - effective utilization of the Administrative register for control by business over the 12.2008 IMSAAR administration of the regimes - preparing an annual public report on the facilitation of the better regulation policy Annually, in the CoM month of March Measure 2.6. Broadening the of data and improvmg the access to intormation end of 2008 PPA, CoM. MSAAR .in the Public p. Register Measure 2.7. Developing indicators for evaluating the activity of the control 03.2009 Regulatory organs, CoM organs. i IMeasure 2.8. Evaluating the activities of the control organs. 03.2010 Regulatory organs, CoM i GOAL 3. INTENSIFYING THE DIALOGUE WITH STAKEHOLDERS ,l1easure 3.1 Mandatory, timely and effective consulting with Permanent All institutions M""""rf' 3.2. Developing and integrating a policy of mandatory and timely 1(,(\Mlliti'1g. on the basis ofthe minimal consultative standards and practices of the IEuropean Union 1- working out consultation procedures 09.2008 CoM, MEET, MSAAR X 1- training the administration in conducting consultations as a part of the impact lAs of 09.2008 CoM, MSAAR and IPAEI assessment process X - developing a new module and functionality of the Portal for public consultations 03.2009 CoM --= for recommendations from the business, the non-governmental sector and the citizens regarding regulation improvement X iMeasure 3.3. r(\n~lIlt"tinn~ with business stakeholder groups regarding their role in MEET, CoM, branch Ithe system of impact a, ;m. ministries Measure 3.4. Prolonging the term for consultations with stakeholders via an 10.2008 CoM amendment to the Law on Statutory Instruments i Measure 3.5. Mandatory publishing of normative acts relating to administrative Permanent Branch ministries regulation on the Public Consultations portal at least 30 days prior to their i submission to a session of the Council of Ministers GOAL 4. OPTIMIZING THE REGULATION AT MUNICIPAL LEVEL AND CONSOLIDATING THE CAPACITY AT MllNICIPAL LEVEL FOR IMPLEMENTING GOOD REGULATORY POLICIES Measure 4.1. Overview of administratIve reg"l"tion and admimstrative control over commercial activities at municipal level I APPENDICES Operative Goals and Measures Term Responsibility of - analysis of the regimes implemented at municipal level From 06.2008 to CoM, MSAAR, NAMRB X 02.2009 - abolition of unlawfhlly implemented regimes 02.2009 Municipal councils, X regional directors 1- recommendations for legislative changes aiming to optimize the control over 05.2009 CoM, mayors, municipal ·regulation at local level councils, regional directors, NAMRB Measure 4.2. Comparative analysis of regulation practices at municipal level From 09.2008 to CoM, MSAAR, NAMRB 09.2009 i Measure 4.3. Optimizing the activity oflocal self-government bodies · formulating directions for better regulation at municipal level 02.2009 CoM, MSAAR, IPAEI, NAMRB, mayors, X municipal councils, regional directors - spreading of good practiees 02-07.2009 CoM, MSAAR, IPAEI, NAMRB, mayors, municipal couneils, regional direetors 1- developing a plattorm for exehange of knowledge and ideas for better regulation 02.2009 CoM, MPAAR, IP AEI, NAMRB, mayors, municipal eouneils, regional direetors Source: Report on the Implementation of the Better Regulation Program 2008-2010. Completed (for permanent activities - in progress) Partially completed Uncompleted Appendix 4: Survey Questionnaire to Stakeholders I. Name of respondent 2. Profession and current position of the respondent 3. How do you estimate your level of knowledge of the Limiting Administrative Regulation and Administrative Control on Economic Activity Act (LARACEAA) since the debates before its adoption to date? (Please tick the correct answer on each line) ' . .. I i Chronology 'Excellent I' Good I Satisfactory I Not acquainted ---t' I 3.1. Before the adoption of I I , , the Act in 2003 - the I I debates on it i f-3-.-2.--tI-F-inal version-o-f-th-e-r-.- - ------t--- -----+---------.,1 Act adopted by the! -+----'-+- National Assembl 3.3. Amendments in the i eriod 2003-2008 ,-------ii--'- Amendments in 2009 ~---- ...---~-----~------- 4. Do you keep track of public discussions and publications on LARACEAA? (one answer) 4.1. Yes, very actively, and I take part in them ........................... 4.2. Yes, \vith interest ....................................................................... . 4.3. Yes, when I find such material ................................................ . 4.4. 1'l"0 ................................................................................................ 5. How often do you deal with issues regulated by LARACEAA? (one answer) 5.1. At least once a week ...................................................... . 5.2. At least once a month .................................................... .. 5.3. Several times during the year ...................................... . 5.4. Very occasionally ................................................... .. 6. What are the major occasions to deal with issues regulated by LARACEAA? APPENDICES 7. How do you assess the level of achievement of the LARACEAA objectives by the beginning of20 107 (Please tick the correct answer on each line) I i I Achieved Do Achieved: is rather Fully . Achieved to not Objectives to a high a low extent contrary achieved kno extent to the objective WI 7.1. Goal ofthe Act Facilitate and promote economic activity through limiting to publicly justified limits the administrative regulation and administrative control exercised by state ! authorities and local governance bodies 7.2. Specific objecttues 2 Protect free economic initiativc Clearly define the limits of administrative intervention 3 in economic activity at central and local levels Restricting and reducing publicly unjustified burdening 4 I of economic activity Clear defining of the types of regimes regulating 5 economic activity Increasing transparency in the introduction of regulatory 6 regimes i Restricting the introduction of new rcgulatory regimes I 7 . (licensing and registration) by requiring a motivated I opinion on the necessity for such a regulation and I advance notification of atlected persons 8 iElimin~t~ng normative requirements that may reduce competillon Reducing sources of corruption by limiting the 9 discretionary power of administration Securing pUblicity ofthe work of administrative bodies I in applying normative acts related to administrative to regulation and control on economic activity, as well as i the reasons for their changes 7.3. Operational objectives : II Standardizing documents on different regimes of : administrative regulation and control Computerizing or creating casy-to-use forms of existing 12 rcgisters : I3 Improving intra-institutional coordination Improving inter-institutional coordination, including the 14 access to judicial registers and civil status registers 15 ! Implementing the principle of '"one-stop shop" 16 I Strengthening the subsequent control on businesses I through spot checks and documents I 8. Rank the three objectives achieved to the greatest extent in early 2010 and comment on the reasons for this success? (use the numbers from question 7) 8.1. First place, objective No. 8.2. Second place, objective No. 8.3. Third place, objective No. Ex-Post Assessment of the ALARACEAA APENDIX4 9. Rank in reverse order the three objectives that were achieved in the least extent, or for which the result is rather contrary to objectives set, by early 20 I 0 and comment on the reasons for this failure? (use the numbers from question 7) 9.1. First place, objective No. 9.2. Second place, objective No. 9.3. Third place, objective No. 10. Rank on a scale from 1 to 5 the extent to which the listed drivers impede the efficient implementation of LARACEAA. I - Very high 2 - High 3 - Low 4 - Very low 5 - Do not know (Please answer on each line) L _ ...... Drivers Estimation ·I Insufficient number of administrative officials to implement the Act Low competence of the administration - lack of knowledge of legal 2 requirements Poor organization of administrative structures, which does not guarantee the i3 timelv examining of documents submitted by businesses Unwillingness to eliminate the opportunities for administration to exercise 14 power over business i5 Desire of central governo~~ to provide financial resources for the institutions 6 Desire of local governors to provide financial re~ources for municipalities I 7 Desire of the administration to preserve opportunities for corruption .8 Business lacks kn()wledge of the opportunities provided ~)' the Act i Weak capacity of business organizations to impose their views on central and 9 local levels 10 Lack of sufficiently powerful bllsiness lobbies - ! Willingness of branch organizations to legally ensure the inflow of funds ·11 through the issuance of qualification certificates 12 Wish of licensed or registered businesses to restrict competition 13 Lack of administr Law on waste yes wastes from ferrous and I management i non-ferrous metals I 26. Activities in the energy SCEWR I Law on Energy yes sphere 27. Activities, related to NRA Law on safe utilization of yes utilization of nuclear nuclear energy installations, nuclear material and other source of ionizing radiance 28 Exercising of supervision at MRDPW Spatial Law yes 1 . construction sites Directorate for National Construction Sup~rvision 29. Railway transportation of MTITC - Executive Law on railway transport yes passengers and/or freight Agency Railway and inspection of the Administration technical condition of the carriages and the legal capacity and qualification of the personnel 30. Public transportation of MTITC Executive i Law on road transport no passengers and freight via Agency Automobile automobile transportation, Administration including international transportation 31. Conducting inspection of the MTITC Law on road transport no technical condition of the means of road transportation; repair and technical servicing of those means 32. Universal postal service or CRC Law on postal services yes of services which fall within the scope of the universal Ex-Post Assessment of the ALARACEAA APENDIX 7 Regime/Activity Licensing Organ Legal Ad Availability of a I Public Retdster 33. Postal money transfers CRC Law on postal services yes i 34. Airport operator activities; · MTITC - General Law on aviation no I ground services operator or ! Directorate airline carrier I "Aviation I Administration" I 35. Technical servicing and · MTITC - General i Law on aviation no repair of aviation technology Directorate" Aviation Administration" 36. . Manufacturing, import , CRC Law on communications and/or distribution of radio i transmission devices for . 37. civil purposes I I I Radio and television I CEM Law on radio and yes activities i television 38. Conducting freight · MTITC Executive Trading navigation code no I transportation along internal Agency Maritine water-ways Administration I 39. Provision of social services MLSP - Agency for Law on social assistance to children social assistance I Law on child Qrotection 40. Conducting and certifying of NAVETatCoM i Law on vocational yes vocational training i education and training 41. Informing and conducting of I NA VET at CoM i Law on vocational yes i vocational orientation education and training .-~. Source: Authors' research, as of January 2010.