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„In tune with Business”

Programme for a business-friendly


environment in Hungary

CSERNENSZKY László
Ministry of Economy and Transport, Hungary

Conference on the European Charter for Small Enterprises


Bled/Brdo (Slovenia), 3-4 June 2008

Hungary in WB Doing Business


2007 2006 change
Ease of Doing Business 45 51 -6
Starting a Business 67 91 -24
Dealing with Licences 87 88 -1
Employing Workers 81 94 -13
Registering Property 96 101 -4
Getting Credit 26 21 +5
Protecting Investors 107 105 +2
Paying Taxes 127 124 +3
Trading Across Borders 45 42 +3
Enforcing Contracts 12 12 -
Closing a Business 53 52 +1

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„In Tune with Business” Program –Why?
Objective:
Reduction of compliance, EU Objective:
operational and transaction costs Administrative costs to be
of enterprises to an unavoidable reduced by 25% until 2012.
minimum level

Administrative costs amount to Administrative burdens related to


about 4.5-6.7% of the GDP in national legislation amount to
Hungary while the EU-25 about HUF 1000 bn. They should
average is 3.5% be reduced by HUF 100 bn on
average per annum in the coming
five years.

Two focuses of the governmental


programme
– cutting administrative burdens emerging from
out-of-date state regulation
– decreasing additional costs and losses
resulting from the imperfect market operation
due to inadequate regulations and/or law
enforcement

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„In Tune with Business” – How?
„In Tune with Business” Program together with Deregulation Program
was approved by the Government in April, 2007

Market Transparency Simplification of Company


and Fair Competition Registration & Tax Administration
4 measures 13 measures

Financial Operational 33 measures Legal Security and


Conditions Enforcement
6 measures 5 measures
Other Proposals
5 measures

Action plan
Simplification of tax and contribution declarations Mid-term task
Consolidation of declarations and payments
Making use of electronic procedures Short-term partial results

Improvement of administrative procedures


Tasks for over a year
E-government
More professional bureaucracy Results within a year
Elimination of redundant data collection
Decreasing chain debts Tasks for over a year
Improvement of debt management
Accelerating return of acknowledged debts Results within a year
Public procurement legislation
Accelerating payments from buyers Tasks for over a year
Examination of opportunities to
Results within a year
determine maximum payment deadlines by law

3
Accessibility of company related information Mostly within a year
Company data via Internet,
Positive reference data, precautionary data Good partial results

Rules on bankruptcy and liquidation Mostly within a year


Acceleration of procedures
Banktruptcy law for sole proprietors Partial results

Organisational changes for Mostly within a year


effective coordination of actions against
black economy and corruption Partial results

Simplification of businesses establishment Mostly within a year


Making business establishment faster and cheaper,
lower start-up capital requirements Success

Development of information Mostly within a year


dissemination on regulations Substantial delay

Lessons (recommendations):
• Business sector – government partnership
• Inter-ministerial and agency cooperation
• Project implementation (organisation and
procedures -> co-ordination)

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Lessons (warnings):
To avoid
- hesitations
- too much compromises
To solve
- Good and motivated staff

Inspirations
• Doing Business surveys (World Bank)
• World Competitiveness Yearbook (IMD)
• Global Competitiveness Report (World
Economic Forum)
• Better regulation (EU – NL, UK, DK, DE)
• Reducing red tape (OECD – USA, NZ, AUS …)

5
Summary for policy makers
• Clear vision needed + a champion within
the government
• Consultations and stable partnership
• Long term commitment
• Measurement – strategy – organisational
guarantee (monitoring, pressure)
• Human resources