Subnational Business Ready Report Offers Roadmap to Benefit Croatian Firms, Workers, Society
ZAGREB, December 9, 2024 – Across the world, the private sector is a powerful force for economic growth—but it needs the right environment to thrive. Presented today, the Subnational Business Ready (Subnational B-READY) in the European Union for Croatia 2024 study delivers a thorough, data-driven analysis of business climates at the local level, to inspire policy reforms that promote balanced and inclusive economic growth, job creation, and sustainability.
By examining key areas of the life cycle of a firm - Business Entry, Business Location (Building Permitting, Environmental Permitting, and Property Transfer), Utility Services (Electricity, Water, and Internet), Dispute Resolution, and Business Insolvency – the report offers a road map for improving administrative processes and regulatory frameworks that directly affect businesses at the local level in five Croatian cities: Osijek, Rijeka, Split, Varaždin, and Zagreb.
“The results of the Business Ready project provide a clear roadmap how to further strengthen the competitiveness of the Croatian economy and create a more favorable business environment. Through concrete reform measures and reduction of the administrative burden, businesses have already been able to make savings in the amount of 250 million euros. With new action plans we aim to make it possible for entrepreneurs to further reduce spending by 365 million euros,” stated Goran Romek, State Secretary at the Ministry of Economy. “The Business Ready project, implemented with the support of the European Commission and the World Bank, enabled us to conduct a detailed analysis of administrative procedures and their impact on entrepreneurs. These results offer a solid basis for defining new measures that will provide entrepreneurs with easier access to the market, increase transparency and reduce administrative costs. This is a step towards an even better economic system in which businesses are key partners in the development of a sustainable and competitive economy. Our goal is to position Croatia as a leader in innovation, sustainability and efficiency of the business environment, both at the regional and European level, and today's event demonstrates that we are moving in the right direction.”
“Sustainable and inclusive private sector development brings benefits for all, workers, firms, and communities. But we know that success is dependent on the degree to which public policies and regulations establish a conducive business environment, promoting entry of new firms, facilitating growth of existing businesses and creating high-quality jobs,” said Jehan Arulpragasam, World Bank Country Manager for Croatia. “We are pleased that the World bank has partnered with the European Commission and the Ministry of Economy in the conduct of study that can help national and local governments identify policies that either promote or constrain business development.”
The study has found that each of the five Croatian cities has room for improvement on most of the measured topics. It also concludes that these cities all have something to share with and learn from each other and that no single city does equally well on all five aspects. Four of the five cities lead in at least one of the measured areas.
Rijeka is the top performer in Utility Services and is among the two top-performing cities in Business Insolvency. It has the most reliable electricity supply with the least frequent interruptions among the five cities. Similarly, the duration of reorganization proceedings is fastest in Rijeka, where authorities can complete this process in 18 months. In Osijek, completing the same process takes 24 months.
Split is the top performer in the Business Insolvency category as it excels in liquidation and reorganization times (24 and 19 months, respectively). However, Split lags in Business Location compared with other Croatian cities. The city’s low scores reflect its lengthy process of transferring property ownership rights. Similarly, obtaining a building permit takes almost a year in Split while the same process is fastest in Varaždin, where it takes four months.
Registering the transfer of property rights takes between 8 days in Osijek and 60 days in Split. This difference in time mainly reflects how long it takes to register the deed at the Land Registry.
There are cross-city learning opportunities, as Varaždin could learn from Split’s more efficient liquidation and reorganization procedures. In contrast, Split could learn from Varaždin’s expedited building permitting process.
Despite being the top performer in the Business Location, Varaždin lags behind other cities in Dispute Resolution, mainly due to the perceived reliability of courts by senior management of companies (source: Enterprise Surveys).
The capital city, Zagreb, is the best performer in Dispute Resolution. This is mainly because alternative dispute resolution mechanisms in the city are deemed more reliable (source: Enterprise Surveys). Zagreb could further improve its provision of Utility Services, specifically by shortening the time necessary to obtain water connections.
Osijek stands out for offering the fastest electricity connection as well as the fastest and least expensive water connection processes. However, it trails other cities in Business Insolvency due to a lack of specialized insolvency judges and the technical equipment to organize virtual hearings.
The Subnational B-READY study targets a wide audience, from national to local government officials, and from private sector stakeholders to development agencies, policy makers, and researchers. The findings are meant to help these groups identify best practices, reduce regulatory bottlenecks, and foster a more unified and efficient business environment across regions. Additionally, the collected data can serve as an effective tool for local governments, enabling them to benchmark and track performance over time vis-à-vis not only national standards but also international benchmarks.
This study was carried out under the auspices of the Ministry of Economy of Croatia and was funded by the European Commission’s Directorate-General for Regional and Urban Policy and is part of a larger series of studies that so far includes 12 European Union member states.
