Hospodářské noviny has created a list of the seven most absurd bureaucratic obligations required for setting up a business in ČR.
While last year it took forty days to get all the necessary documentation for starting a business in the Czech Republic, this year the same is possible within fifteen days, according to the Doing Business report published by the World Bank. While it takes Slovaks sixteen days to register their business, New Zealanders, for example, can start fulfilling their entrepreneur’s dream as soon as 24 hours after submitting the sole required document.
Administrative obstacles encountered by Czechs in setting up a business have been pointed out for the second time by the poll Absurdity of the Year, part of the contests Vodafone Company of the Year 2008 and Makro Entrepreneur of the Year 2008, conducted by Hospodářské noviny. Seven nominations have been chosen from almost 100 suggestions made by entrepreneurs and the public.
Although it is now faster to set up a business in the Czech Republic, the amount of requested documentation is decreasing very slowly. This can be proven by the fact that since last year’s poll, only one out of seven most absurd legal obligations chosen by the public has been eliminated to date. The second obstacle will be eliminated as of 1 January.
There are things to improve
Last year’s absurdity number one has fallen into oblivion thanks to the amendment to the Trades Licensing Act. This was an obligation to report to local trade licensing office three days in advance that an entrepreneur was going to offer their goods at an exhibition or a fair. Another absurdity, consisting of an obligation to report to the local employment office that an entrepreneur’s foreign employee was going for a business trip longer than one week but shorter than one month, will disappear in January 2009 with the introduction of the so-called green cards.
This year’s nominations single out, for example, the obligation to gain an unnecessary certification of barrier-free access that would be assessed directly by a construction department officer, or a five-year ban on business in road transport in case the company’s owner does not provide proof of financial solvency.
Also the Labour Ministry’s requirement requesting the owners of job agencies to submit proof of integrity, education and training documentation and to pay a large fee every three years, is among the seven most absurd administrative obligations. The ministry defends itself, however, saying the number of agencies is constantly growing and the situation of their clients is not usually very good. “In many cases there are practices that resemble “forced labour,” says Jiří Sezemský, spokesman for the Ministry of Labour and Social Affairs, which is now registering 2,356 valid permits.
Promise: Decrease of administrative burden by 20%
Bureaucracy should be flogged more often now. The government pledged in the past to lower the administrative burden for entrepreneurs by 20% by 2010. Now the Trade and Industry Ministry wants to turn its promises into practice. Thanks to the amendment to the Trades licensing Act valid since July, in the third quarter of 2008 there were 12,000 more people who started their businesses in comparison with last year, the Trade and Industry Ministry said. The project supporting out-of-court settlement to lawsuits has also proved to be effective. Within six months since it has taken effect, three quarters of more than 700 cases have been closed, the Ministry said.
“We are preparing more measures that should save entrepreneurs’ money and time. Since October, people can register or change their business also via the internet. As of next year, technical norms will be cheaper by up to 50% and there will be less statistical forms that firms are obliged to submit,” says Minister Martin Říman. The Ministry is planning to cut CZK 17.28 billion from the total of CZK 86.4 billion that businesses pay for administration.
