Where is it easier for Romanian entrepreneurs to start a business?

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Romanian entrepreneurs face different regulatory hurdles depending on where they establish their businesses. Implementation of business regulations as well as efficiency of public agencies vary within the country. Largest differences can be seen in contract enforcement, getting electricity and dealing with construction permits.

According to World Bank’s ‘Doing Business in the European Union 2017’ report, it’s easier for Romanian entrepreneurs to start a business in Bucharest, Oradea, Ploiesti and Timisoara – where VAT registration takes one week, compared to two weeks in Constanta and almost three weeks in Craiova. Dealing with construction permits is more efficient in Craiova due to a streamlined process for obtaining pre-construction clearances. Iasi leads in the area of getting electricity, while Oradea stands out for its   greater quality of land administration and Timisoara for its performance in contract enforcement.

“Most cities – except Brasov and Ploiesti – outperform the European Union average in contract enforcement, and Oradea also does so in registering property. However, there is still room to improve in dealing with construction permits and getting electricity. Construction permitting is considerably more burdensome than in most other EU member states, largely because of the number of approvals builders are required to obtain before   applying for a building permit,” Doing Business report reads.

Meanwhile getting electricity takes 3 months longer than the EU average even in the fastest city benchmarked, Iasi.

Bucharest ranks in the top half among Romanian cities in most areas measured demonstrating the potential for dealing efficiently with high demand for business services. Compare this with Budapest and Sofia, which both lag behind most of the smaller cities in their countries due, in part, to higher transaction volumes, WB shows.

“The gaps in performance among cities in each country suggest that there are important lessons that local and national policymakers can learn from one another and this will make a difference in the
relative competitiveness not just within-country but also at the global level,” said Mierta Capaul, Manager of the Subnational Doing Business program at the World Bank.

To ease the start-up process, Romania could follow Hungary’s example and consolidate VAT registration with business and corporate tax registration at the Trade Registry.

Doing Business in the European Union 2017: Bulgaria, Hungary and Romania goes beyond the capital cities – measured by Doing Business – to identify good regulatory practices, uncover administrative bottlenecks and recommend reforms based on examples from each country and 187 other economies measured by Doing Business.

The report was prepared by the World Bank Group and funded by the European Commission, Directorate General for Regional and Urban Policy.

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