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The Warsaw Voice » Business » November 29, 2012
Business & Economy
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Poland ‘More Business-Friendly’
November 29, 2012   
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Poland has carried out reforms designed to make it easier to do business faster than any other country, according to a report by the World Bank and International Finance Corporation (IFC). But Polish entrepreneurs say that have not noticed any major improvement and complain that absurd red tape is hampering their efforts to run a business.

The Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises report assesses regulations affecting domestic businesses in 185 countries. The report authors identified Poland as the global top improver in the 12 months from June 2011 to June 2012 in terms of ease of doing business. As a result, the country moved from 74th to 55th place in the table. Singapore topped the global ranking in terms of the ease of doing business, followed by Hong Kong, New Zealand, the United States, Denmark, Norway, Britain, South Korea, Georgia and Australia.

The report shows that Poland was the best performer among the countries which recorded an improvement in three or more areas of business regulation. “It is not only Poland’s recent scores that have improved, but Poland also ranks among the 30 economies that since 2005 have done the most to streamline their regulatory environment for business,” said Augusto Lopez-Claros, director of global indicators and analysis with the World Bank Group. “Looking at 20 reforms recorded by the Doing Business report in the past eight years, Poland appears as the regional and global leader.”

Poland achieved significant improvement in a number of areas important for doing business including enforcing contracts, registering property, resolving insolvency and paying taxes.

No miracle
“The performance we are celebrating today is not a miracle. It is the result of hard work, of determined and patient efforts, which have been sustained over the years since the government first took office,” said Xavier Devictor, World Bank country manager for Poland and the Baltic countries. “Improving the business environment is not a sprint, it is a marathon. This is not about adopting a few new regulations, making small changes here and there. This is about a systematic effort across the board to cut red tape—to review which regulations make sense and which could be simplified, to revamp the underlying institutional systems and administrative processes, to implement smart regulations effectively. This is an endeavor that has to be sustained over years to yield its fruits,” he added.

Commenting on the report findings, Prime Minister Donald Tusk said that to move up just a few places in the league table Poland had to make a big effort and overcome bad practices. “Drafting a new regulation is not a big feat. The biggest feat is to devise a wise legal framework,” he said during a presentation of the Doing Business 2013 report at the Warsaw Stock Exchange. “Our first measures to deregulate did not produce results and even became an object of ridicule. But it is now clear that the efforts made a few years ago have started to produce results.”

Waldemar Pawlak, deputy prime minister and economy minister, said that Poland owed its improvement in the Doing Business league table to the government’s efforts to reform Polish legislation. “Our priority is to create the best business environment in Europe,” he said. “This may be achieved by removing administrative barriers and relaxing reporting obligations for individuals and businesses.”

Polish entrepreneurs are more critical of the results of the economic reforms conducted by the government so far. During the First Congress of Reliable Firms held in Warsaw in October, almost 10,000 businesses were asked about the impact of Polish legal absurdities on their operations. The findings of the survey are not optimistic, with nearly 89 percent of those polled saying their earnings could have been higher and their operations more efficient if regulations were more business-friendly. Polish businesses do not expect the situation to improve quickly, with around 50 percent of those polled saying a change for the better is possible in eight or 10 years at the earliest.

Call for change
The congress organizers and businesses hope that the business community’s opinion as reflected in the survey will trigger changes to Polish law. The survey shows that almost 52 percent of firms surveyed have lost money or business partners because of absurd regulations, with more than 15 percent of the firms having experienced such problems many times.

Polish entrepreneurs say that the regulatory reforms conducted in the past two years have failed to change the environment in which Polish businesses operate. In total, 66 percent of those surveyed did not notice any change that would make it easier to do business in Poland while 15 percent noticed such changes, but said they were of little significance to their businesses.

Tax regulations are considered to be the biggest problem, highlighted by 42 percent of those surveyed, while almost 19 percent named labor regulations as the biggest problem. Among the most absurd regulations identified by the surveyed businesses is accrual-based VAT accounting, that is the requirement to pay VAT to the taxman irrespective of whether or not the buyer of the products or services has already paid for them. However, the government says this regulation will soon be amended to allow small and medium-sized businesses to pay VAT after they have received payment for their products or services. The surveyed businesses also criticized the regulation requiring VAT on imports to be paid within 10 days. Among other barriers to business they mentioned the absence of uniform deadlines for tax refunds, high labor costs, the need to employ a worker under a contract of employment for an indefinite period after two contracts for a definite period have already been signed with them, the obligation to keep copies of paper documents generated by cash registers for five years, and public procurement regulations.
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