TALLINN - Estonia remains the most business friendly country throughout Eastern Europe, though Latvia has managed to close the gap between the two Baltic neighbors, a new annual report by the World Bank has found.
According to "Doing Business 2008," Latvia moved up two notches to take the 22nd place among countries with the most favorably business environment, four places in front of Lithuania yet five behind Estonia.
Generally, the report lauded Eastern Europe for its improved pro-business regulatory environment, saying the region has overtaken East Asia as far as ease of doing business.
In terms of improvement since the last report, Georgia and Croatia were leaders in the region, so that now there are 15 registered businesses per 100 people in Georgia, ahead of both Estonia and Poland, which have 12 per 100.
Estonia, however, remains the most business friendly country in the former Soviet bloc territory.
"Eastern Europe has witnessed a boom in new business entry, and many of the new companies are becoming global leaders, such as the Estonian-born software company Skype and the Czech car maker Skoda," Michael Klein, World Bank/IFC vice president for financial and private sector development, said in a statement.
The report, according to the bank, is designed to indicate which countries have "created a regulatory environment conducive to operating a business, yet the rankings do not tell the whole story." It does not take into account factors such as infrastructure, macroeconomic policy, proximity to large markets or law and order.
Although Estonia outpaces the rest of the region, it has backtracked one position from 2006. Nevertheless, an investor needs only seven days to start a business in Estonia, while in Latvia the required start-up period is 16 days and in Lithuania 26.
Latvia leads in terms of conditions of employee remuneration and also by the number of taxation procedures.
The Baltic state, however, has fallen behind in terms of time consumed for these procedures. (Latvian business must still file monthly tax forms, whereas in Estonia filings are made quarterly.) For instance, while businesses in Estonia have to spend only 81 hours a year and in Lithuania 166 hours a year in terms of taxation formalities, the time in Latvia reaches 219 hours.
The most favorable countries for business were Singapore, New Zealand and the United States, while the least favorable country for business is the Democratic Republic of Congo. Russia was noted as having undertaken harmful reforms for its business environment, particularly with licensing requirements.
A joint IFC-World Bank product, "Doing Business" is based on more than 5,000 local experts around the world 's consultants, lawyers, accountants, government officials and academics 's who provide empirical input and methodological support, the World Bank said.
