Planned Activities of the Government in Efforts to Enhance Business Climate

On 12 April 2017 Mr. Daniel Hinšt and Ms. Jasminka Barić from the Ministry of the Economy, Entrepreneurship and Crafts presented planned activities of the Government in efforts to enhance business climate. Presentation was held at the Trade and Investment Committee meeting and it was open for AmCham members.

Ms. Doko Jelušić opened the meeting by welcoming gusts from the Ministry and thanked them for an interest to present such an important topic to the members of AmCham. AmCham expressed will for future cooperation on the issue of enhancing business climate.

Mr. Hinšt gave an overview of the state of Croatian business climate and undertaken measures in recent years. Croatian economy is one of the most conservative in the European Union despite the fact that some 200 measures to unburden doing business were adopted since 2011.

The ambitious plan laid down in an Action plan aims to:
• Unburden business sector by removing unnecessary administrative requirements and cutting administrative costs and fines by 30% in each regulatory area.
• Unburden business sector by removing at least 70% of unnecessary administrative requirements for starting a business.
• Enable full freedom on of competition and access to the EU internal market (by activating Art. 60 of the Treaty on the Functioning of the EU in regards to the Services Directive Croatia will be able to take further positive steps beyond it is proscribed in the Directive. This would enable changes in Regulated professions such as notaries and pharmaceutical sector).
• Easier and simpler access to public procurement procedures for business sector.
• Business sector released from uncoordinated and uneven inspection.

The novelty in the current efforts of the Ministry to unburden administrative costs is systematic use of the Standard Cost Model (SCM) in the process of enhancing procedures and horizontal cooperation between Governmental bodies in effort to find solutions for interdisciplinary / inter-institutional issues.

The SCM measures administrative costs of all prescribed obligations that the business sector has towards regulation and bureaucratic procedures (red tape). It is a tool recommended by the European Commission and used in the OECD countries on reducing administrative costs and procedures. The SCM formula includes: required time x gross hourly wage x fixed material costs (30%) x fees x annual frequency = administrative costs for a subject.

The horizontal cooperation between Governmental bodies implies cooperation of mid-management civil servants from relevant institutions. It is mid-management civil servants who are usually experts on certain issues and those who write proposals for new legislation. Horizontal approach is most suitable in efforts of achieving simplification and financial cuts of administrative procedures. Vertical approach, used in the past, had more lines of communication with different management levels between Governmental bodies and it had a number of shortcomings.

AmCham members expressed their support for the presented efforts and plans of the Ministry. The issue of promotional activities and education of relevant stakeholders of the planed measures was brought up. Mr. Hinšt explained that the team working on these reforms consists of civil servants who do not have a possibility to publicly promote their work as they have to remain politically neutral. By the end of the year there are some 104 measures to be undertaken, of which 87 are under the jurisdiction of The Ministry of Economy.

Ms. Doko Jelušić and Mr. Hinšt agreed that business community as a whole should engage more in the efforts to promote planed measures and contribute to the education of relevant stakeholders on the implementation.
Ms. Doko Jelušić proposed to:
• Inform and include other foreign Chambers of Commerce present in Croatia in the efforts to promote planned activities to remove unnecessary administrative requirements and to cut administrative costs.
• Promote a web site psc.hr (a one-stop-shop offering business information on administrative obligations for easier service marker access in Croatia) to the businesses community through the AmCham Newsletter and AmCham Magazine coming out in June.
• Promote poslovna-klima@mingo.hr (an e-mail as a direct line of communication between The Ministry of Economy and the business community to send inputs and suggestions for improvements and their concerns for issues they face) to the businesses community through the AmCham Newsletter and AmCham Magazine coming out in June.
• Overall, better and stronger engagement of the business community in their demands for creating a better business climate.