Exclusive/ Head of WB in Albania Camille Nuamah
The report, an effective tool of motivating reforms
Says World Bank official
Why is the report titled “Doing Business 2009” and not “…..2008”?
It has been a longstanding practice at the World Bank Group to date reports forward to the time when they are in circulation rather than when the data is collected and the reports are written. For example, the forthcoming World Development Report usually launched around the time of our Annual Meetings in the autumn, will be entitled World Development Report 2009.
Compared to last year, Albania has experienced a huge improvement in promoting business environment in the country. What is Albania doing right, and where does it need further improvement?
Albania has made significant reforms in the area of starting a business, getting credit, protecting investors and paying taxes. Additional ongoing reforms in starting a business, transferring property, paying taxes and closing a business should see further improvement in the indices in these areas in next year’s assessment as well. The areas that are in need of greatest improvement are in dealing with construction permits where the time, costs and procedures remain very high, and in employing workers where there is the need for more flexibility in the labor code to encourage formal job creation.
What do you think is the impact of the WB report on future Government policy-making?
The Doing Business report has proved a very effective motivator of reforms across a number of countries, and as well in Albania. The international recognition as well as demonstrated medium term impact on business registration and foreign investment provides a good rationale for governments to continue reforms in these areas. In Albania, it is expected that the government will follow-through on reform in the area of taxes, property registration, closing a business, among other areas. A complementary impact of the report can be to raise public awareness about the key steps in various business processes so that both businesses and citizens can advocate for further reform.
What would you say is the impact of the report on foreign investment in Albania? Do you think the report will improve Albania’s credibility on foreign investor’s eyes?
It’s too early to say what will be the impact of the report on foreign investment in Albania. However, for other countries both in Eastern Europe and around the world, foreign direct investments (FDI) has increased more rapidly following significant reforms in the areas of the Doing Business indicators. In Albania, the introduction of new rules on protecting investors will provide some comfort to foreign investors who invest here as minority shareholders with domestic firms. Of course, application of the law will also depend on the effectiveness of the court system, which remains a key challenge in Albania as can be seen from the index on enforcing contracts. However, it should also be remembered that laws in and of themselves can provide a benchmark for healthy businesses and a deterrent for unfair practices among private parties.
How would you answer to criticism that the indicators used in “Doing Business
2009” do not reflect the whole reality of the business environment?
No single report or set of indicators can reflect the whole reality of the business environment in any country, much less as provide a robust comparison across 181 countries. Doing Business focuses on 10 key areas that are important for the formation and growth of small-to-medium sized businesses in any market economy, and have been demonstrated by a host of academic research to have an impact on FDI as well. Clearly there are other aspects of the business environment, such as quality of infrastructure, strategic location, availability of skilled labor, or extent of corruption, that are not measured by these indicators, but which are also more difficult to compare across countries. The World Bank uses other tools, such as the upcoming Albania Investment Climate Assessment, which can explore in more detail the specific issues facing a particular economy.
Albania has improved 49 positions from last year, which makes it nothing short of a miracle. But what does this improvement really tell us?
Albania improved 49 positions in the ranking from last year, on account of two very bold reforms which put the country among the top 20 countries in the world in their treatment of these issues — the establishment and operations of the state-of-the-art credit registry by the Bank of Albania, and the amendment of the companies law to include modern, up-to-date investor protection rules — as well as other reforms including the establishment of the National Registration Center and the lowering of corporate tax rates. The country’s new ranking of 86, which puts it on par with other countries in the sub-region, tell us that Albania has achieved and can continue to achieve a rapid pace of convergence with, first and foremost, the countries of the former republic of Yugoslavia, and then with other countries in greater Europe.
