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SURVEY OF SMALL AND MEDIUM-SIZED BUSINESSES ANALYTICAL REPORT
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List of acronyms
APs administrative procedures
BEEPS business environment and enterprise performance survey
EU European Union
FSIS The Food Safety and Inspections Service
GDP gross domestic product
IEs individual entrepreneurs
IFC International Finance Corporation
IMIS Integrated Management Information System
MEs medium-sized enterprises
OECD Organization for Economic Co-operation and Development
OSHA Occupational Safety and Health Administration
PROFEPA Procuraduría Federal de Protección al Ambiente
RIA regulatory impact analysis
SCM standard cost model
SEs small enterprises
SIDA Swedish International Development Cooperation Agency
SIIP Sistema de Información Institucional de la PROFEPA
SLI State Labor Inspectorate
SMEs small and medium-sized enterprises
TRA technical regulatory acts
USA/US United States of America
Foreword
International Finance Corporation in the Republic of Belarus
International Finance Corporation
International Finance Corporation
The GOAL OF THE RESEARCH
The OBJECTIVES OF THE RESEARCH include the following:
The SURVEY TARGET POPULATION
The DATA COLLECTION METHOD
Methodology
THE ROLE PLAYED BY SMALL AND MEDIUMSIZED BUSINESSES IN THE ECONOMY.
Overview of the Business Environment in Belarus
TABLE 1SMEs PLAY KEY ROLE IN MANY TYPES OF ECONOMIC ACTIVITIES
BELARUSIAN SMALL BUSINESSES HAVE LOW LEVELS OF CONTRIBUTION TO GDP AND EMPLOYMENTFIGURE 3
TABLE 2 POSITIVE TRENDS IN SMALL ENTERPRISE DEVELOPMENT
GENERAL DESCRIPTION OF BUSINESS ENVIRONMENT IN 2008.
FIGURE 4SMEs COMPLAIN MORE ABOUT STATE REGULATION THAN MARKET CONDITIONS8
FIGURE 5 STATE-OWNED SMEs SAY BUSINESS ENVIRONMENT IN 2008 IMPROVED, INDIVIDUAL ENTREPRENEURS DISAGREE
TABLE 3 TAXES, ACCESS TO LAND, LICENSING, PERMITS AND INSPECTIONS MOST PROBLEMATIC FOR SMEs
FIGURE 6FOR MOST FIRMS, THE BUSINESS ENVIRONMENT REGARDING ADMINISTRATIVE PROCEDURES REMAINED THE SAME OR IMPROVED
TABLE 4 UNLEVEL PLAYING FIELD FOR STATE AND PRIVATELY OWNED COMPANIES
FIGURE 7 FEWER REPRESENTATIVES OF STATE-OWNED BUSINESSES WOULD WANT TO START THEIR OWN BUSINESS
SURVEY RESULTS.
Licensing
FIGURE 8LICENSING COVERAGE OF SMEs AND IEs REMAINS HIGH, 1st HALF OF 2009
TABLE 5MOST BUSINESSES WERE ABLE TO NAVIGATE LICENSING PROCESSES SUCCESSFULLY IN 2008
FIGURE 9 AVERAGE TIME AND COST FOR LICENSES HIGHER FOR SMEs THAN IEs IN 2008
FIGURE 10 LICENSING FOR RETAIL TRADE COMPRISES A SIGNIFICANT PART OF ALL LICENSES FOR SMEs AND IEs
TABLE 655% OF SMALL BUSINESSES RECEIVED LICENSES WITHOUT ANY VERIFICATION IN 2008
TABLE 7AMBIGUITY AND INCONSISTENC Y OF LICENSING REQUIREMENTS WAS THE BIGGEST PROBLEM FOR SMEs AND IEs IN 2008
REVIEW OF CHANGES IN THE LEGISLATION.
FIGURE 11 LICENSED ACTIVITIES ARE MORE BURDENSOME, BUT LESS COSTLY FOR SMEs IN 2008 THAN IN 2005
TABLE 8 QUANTITATIVE INDICATORS OF THE BURDEN OF PERMIT-ISSUANCE PROCEDURES, 2008
TABLE 9 OBTAINING A PERMIT IS OFTEN A PREREQUISITE FOR A PLANNED CAPITAL INVESTMENT
FIGURE 13PERMIT PROCEDURES CHARACTERIZED BY LARGE NUMBER OF REQUIRED DOCUMENTS AND COMPLICATED PROCEDURES IN 2008
FIGURE 14AVERAGE TIME TO RECEIVE A PERMIT HAS DOUBLED FOR SMEs FROM 2005 TO 2008
SURVEY RESULTS.
Inspections
TABLE 10 AVERAGE DURATION OF AN INSPECTION HAS SUBSTANTIALLY DECREASED
FIGURE 15 INSPECTIONS COVERAGE REMAINED HIGH IN 2008
FIGURE 16 TOO MANY CONTROLLING AGENCIES WITH TOO MUCH SUBJECTIVE AUTHORITY
FIGURE 17 AMBIGUITY OF INSPECTIONS PROCESSES AND ARBITRARY AUTHORITY OF INSPECTORS REMAIN PROBLEMS
2. CREATING AN INSPECTION INFORMATION SYSTEM
BOX 4. THE UNITED STATES, MEXICO, AND LATVIA OFFER GOOD EXAMPLES OF HOW INSPECTION INFORMATION SYSTEMS ARE DESIGNED AND MAINTAINED OVER TIME
3. FURTHER DEVELOPMENT OF INSPECTION AS WELL AS ACCESS FOR ENTREPRENEURS TO REGULATIVE ACTS
4. DEVELOPMENT AND IMPLEMENTATION OF CHECKLISTS BY INSPECTION AUTHORITIES FOR PARTICULAR TYPES OF BUSINESSES
5. REDUCTION OF FINES BURDEN ON BUSINESSES
6. STRENGTHENING THE CONSULTATIVE NATURE OF INSPECTION AUTHORITIES AND IMPLEMENTING A ‘CLIENT-ORIENTED’ PRINCIPLE
Administrative Procedures37 Specifically and in General
FIGURE 19INSPECTIONS AND PERMITS WERE MORE PROBLEMATIC FOR SMEs THAN LICENSING
TABLE 13COMPLEXITY OF ADMINISTRATIVE PROCEDURES OFTEN OVERSHADOWS CHALLENGES OFCOMPETITION
TABLE 14REGULATORY BARRIERS HINDER SME GROWTH AND EXPANSION
TABLE 15 RECENT EXPERIENCE OF ADMINISTRATIVE PROCEDURES CORRELATED WITH MORE NEGATIVE ASSESSMENTS
TABLE 16 PERSONAL CONNECTIONS ARE THE MOST EFFECTIVE IN DISPUTE RESOLUTION OF ADMINISTRATIVE PROCEDURES
CRISIS AFFECTED SMALL AND MEDIUM-SIZED BUSINESSES ACROSS ALL SECTORS AND REGIONS TABLE 17
Crisis Effects on Small and Medium-sized Businesses
FIGURE 21 CRISIS EFFECTS RAPIDLY SPREAD OVER ALL REGIONS
FIGURE 22 CRISIS EFFECTS RAPIDLY SPREAD OVER ALL SECTORS OF ECONOMY
TABLE 18REDUCTION IN THE VOLUME OF SALES IS THE MOST COMMONLY OBSERVED NEGATIVE EFFECT OF THE CRISIS
TABLE 22NEGATIVE EXPECTATIONS PREVAIL
TABLE 21COST REDUCTION MEASURES WERE LEAST SUCCESSFUL FOR SMALL MANUFACTURING ENTERPRISES
Expectations of Reform
TABLE 23MORE THAN HALF OF SMALL BUSINESSES DID NOT EXPECT THAT THE ANNOUNCED LIBERALIZATION PROGRAM WOULD RESULT IN REAL REFORMS
TABLE 24BUSINESSES RARELY ADJUST THEIR BEHAVIOR TO ACCOUNT FOR EXPECTED REFORMS