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Slovakia made the greatest progress of all in reforms regarding business activities, according to World Bank criteria.

Slovakia, Lithuania and Poland are among the top ten countries across the globe that best improved the business environment last year, a World Bank report on business environments in 145 countries worldwide, issued yesterday, says. The Czech Republic is among the top forty, as a stable country, where, however, no major reforms have been made so far.

This second annual report is based on surveys conducted for the World Bank by tens of academicians, advisors, lawyers and government officials all over the world. They rated every country according to basic criteria, i.e. how long it takes to establish a firm, how difficult taking on a new employee or dismissing an existing employee is, whether credits are available, how well courts work, and whether bankruptcy law is efficient. They also examined how the countries protect investors.

The report is important in particular for businesses that intend to invest in some of the countries.

"It's an important indicator but no tragedy. Although the Czech environment is not rated very good compared to the environments of the other countries, the inflow of investments is still reasonable," Vice-Premier for Economy, Martin Jahn, said. Even so, he considers the report as a clear signal that the things described in it negatively ought to be changed.

"World Bank criteria are only part of what investors take into account when considering where to invest. As far as the Czech Republic is concerned, workforce qualification and availability, high-quality infrastructure, good telecommunications, the geographic position of the country as well as its industrial tradition are the key factors for foreign firms," Head of CzechInvest agency, Radomil Novák, said.

Bankruptcy? More than nine years

Businesses in the Czech Republic dislike the most the fact that it takes an extremely long time to complete the bankruptcy proceedings of an unsuccessful firm. The Czech Republic was the worst of the 26 rated countries of Central and Eastern Europe and Central Asia, among which it was included. A declaration of bankruptcy takes 9.2 years here, according to the report, while in Belarus it is 5.8 years, and 4.7 years in Slovakia.

Sweden (0.7 years) and Belgium (0.9 years) are the best of Western-European countries.

"It's sad but it's no surprise. We know of cases when it takes a Commercial Court judge up to eight months to decide an appeal while, for instance, businesses have to adopt to a new tax law in less than four weeks," said Weston Stacey, Executive Manager of the American Chamber of Commerce in the Czech Republic. He considers the local environment as a system set by bureaucrats for bureaucrats.

"Nevertheless, the reform of the Commercial Register and bankruptcy law is a signal that the government is going to strengthen its support to those who create new jobs rather than supporting those who create the rules," Stacey added.

The necessity to amend bankruptcy law has been discussed in the Czech Republic for seven years. Members of the Lower Chamber of Parliament have postponed the discussion of the appropriate amendment, which is currently in parliamentary committees, until October this time.

Slovakia: the most reforms

Last year, Slovakia, according to the World Bank, made the greatest progress in the world in improving its investment environment. Economic and social reforms pushed Slovakia among the top twenty countries that create the best conditions for the development of business activities.

"Slovakia made the greatest progress," Country Director for Central Europe and the Baltics, Roger Grawe, praised the country yesterday.

Slovakia improved the most in reducing the costs of starting business and in the time needed to establish a firm. As far as the labour market reform is concerned, Slovakia is a country with the lowest costs of dismissing employees.

However, the best business environment of the new Member States of the European Union is in Lithuania, according to the World Bank criteria - the country is on the 17th position worldwide, i.e. one position ahead of Slovakia.

How difficult it is to do business in some countries

The basic criteria according by which the World Bank compared 145 countries worldwide:

Source: World Bank report Doing Business 2005: Removing Obstacles to Growth