„In tune with Business”

Programme for a business-friendly

environment in Hungary

CSERNENSZKY László
Ministry of Economy and Transport, Hungary

Conference on the European Charter for Small Enterprises

Bled/Brdo (Slovenia), 3-4 June 2008

Hungary in WB Doing Business

2007 2006 change
Ease of Doing Business 45 51 -6
Starting a Business 67 91 -24
Dealing with Licences 87 88 -1
Employing Workers 81 94 -13
Registering Property 96 101 -4
Getting Credit 26 21 +5
Protecting Investors 107 105 +2
Paying Taxes 127 124 +3
Trading Across Borders 45 42 +3
Enforcing Contracts 12 12 -
Closing a Business 53 52 +1

1
 „In Tune with Business” Program –Why?
Objective:
Reduction of compliance, EU Objective:
operational and transaction costs Administrative costs to be
of enterprises to an unavoidable reduced by 25% until 2012.
minimum level

Administrative costs amount to Administrative burdens related to

about 4.5-6.7% of the GDP in
Hungary while the EU-25
average is 3.5%
national legislation amount to
about HUF 1000 bn. They should
be reduced by HUF 100 bn on
average per annum in the coming
five years.

Two focuses of the governmental

programme
– cutting administrative burdens emerging from
out-of-date state regulation
– decreasing additional costs and losses
resulting from the imperfect market operation
due to inadequate regulations and/or law
enforcement

2
 „In Tune with Business” – How?
„In Tune with Business” Program together with Deregulation Program
was approved by the Government in April, 2007

Market Transparency Simplification of Company

and Fair Competition Registration & Tax Administration
4 measures 13 measures

Financial Operational 33 measures Legal Security and

Conditions Enforcement
6 measures 5 measures
Other Proposals
5 measures

Action plan
Simplification of tax and contribution declarations Mid-term task
Consolidation of declarations and payments
Making use of electronic procedures Short-term partial results

Improvement of administrative procedures

Tasks for over a year
E-government
More professional bureaucracy Results within a year
Elimination of redundant data collection
Decreasing chain debts Tasks for over a year
Improvement of debt management
Accelerating return of acknowledged debts Results within a year
Public procurement legislation
Accelerating payments from buyers Tasks for over a year
Examination of opportunities to
Results within a year
determine maximum payment deadlines by law

3
 Accessibility of company related information Mostly within a year
Company data via Internet,
Positive reference data, precautionary data Good partial results

Rules on bankruptcy and liquidation Mostly within a year

Acceleration of procedures
Banktruptcy law for sole proprietors Partial results

Organisational changes for Mostly within a year

effective coordination of actions against
black economy and corruption Partial results

Simplification of businesses establishment Mostly within a year

Making business establishment faster and cheaper,
lower start-up capital requirements Success

Development of information Mostly within a year

dissemination on regulations Substantial delay

Lessons (recommendations):
• Business sector – government partnership
• Inter-ministerial and agency cooperation
• Project implementation (organisation and
procedures -> co-ordination)

4
 Lessons (warnings):
To avoid
- hesitations
- too much compromises
To solve
- Good and motivated staff

Inspirations
• Doing Business surveys (World Bank)
• World Competitiveness Yearbook (IMD)
• Global Competitiveness Report (World
Economic Forum)
• Better regulation (EU – NL, UK, DK, DE)
• Reducing red tape (OECD – USA, NZ, AUS …)

5
 Summary for policy makers
• Clear vision needed + a champion within
the government
• Consultations and stable partnership
• Long term commitment
• Measurement – strategy – organisational
guarantee (monitoring, pressure)
• Human resources