Making room for private companies necessary for better business environment – World Bank helping state reform tax system

For the third year in a row, Serbia has progressed on the Doing Business list of the World Bank, concerning the conditions of doing business, but the institution says that there's still a lot to be done. Facilitating the tax payment process and the process of connecting to the power network is crucial to further progress, says Stephen Ndegwa, World Bank Country Manager for Serbia.

Commenting on Serbia's goal of reaching the top 30 from the 43rd spot next year, he says that “it's good to be ambitious, but is is also important to note that numerous steps in that direction need to be realized”.

– There are two critical fields in that respect. The first one is tax payment and the facilitation of this process for companies. Tax burdens are big, especially for new companies. Some of them have to make payments equaling six month's worth of earnings, and connecting to the power network is also a complicated process and Serbia can make a lot of progress there. The ambition is adequate, because, looking at the way the problem with the issuing of construction permits has been solved, Serbia was on the bottom of the list last year, and is now 10th globally – he says.

Ndegwa explains that the most important thing Serbia needs to do in order to create a better business environment is to make room for private companies.

– At the moment, there more than 600 state-owned companies. Of the biggest companies, 10 of them in Serbia, six are state-owned, so it's important to privatize and open those sectors to the market and the competition.

– We would like, for example, to see a progress made in privatization of banks and insurance companies. This would be an indication of the Government's resolve to make the economy more competitive and to attract new investments. We would also like to have better management, and the Government is already oriented that way. In EPS and Srbijagas, they have already carried this out, they have reformed the Serbian Railways, so the capacity and the interest are there, it's just that progress has to be made quickly – Ndegwa says.

He also says that, next year, the World Bank will focus on “helping the Government reform the tax system so that the tax administration would be more efficient and so that the Law on Taxes would be simplified in order to help companies. We will also help the Government rationalize, maybe even privatize the banking sector”.

IFC

Vlada Republike Srbije

Elektroprivreda Srbije ad Beograd

JP Srbijagas Novi Sad

Železnice Srbije a.d. Beograd

World Bank Doing Business list

World Bank Serbia

Stephen Ndegwa

tax payment

power network connection

issuing construction permits

privatization of banks

privatization of insurance companies

tax system reform

Law on Taxes