Business Survey 2013 Belgrade November 13, 2013. 2 Business Survey 2013.

Business Survey 2013

Belgrade

November 13, 2013

Methodology

2


Methodology

Realization: research was conducted in the period between 9th of September and

4th of October 2013

Target population: Private business entities in Serbia with 3 or more employees

Sample frame: List of all business entities (enterprises and establishments)

registered at the Serbian Business Register (2012)

Sample size: 1029 business entities

Stratification: according to region, economic activity of business entities and size

Method of data collection: Face-to-face interviews in company offices

Average duration of the interview: 50 minutes

3

Part 1:Description of Surveyed Businesses

4


Item Measure

# Companies participating in survey / # invited 1029 / 3996

Founded before / after 2000 49% / 51%

Profitable / unprofitable 2010-122010: 90% / 10%2011: 89% / 11%2012: 89% / 11%

5

Characteristics of Surveyed Companies

5, 33%

5 - 10; 36%

10 - 20; 16%

20, 15%

Employment

€ 100,000, 42%

€ 100,000 - 500,000; 32%

€ 500,000, 26%

Annual Revenues

% of participants in survey

Sales by Market

6

Hometown; 64%

Other towns / regions; 29%

Former Yugoslavia coun-tries (excluding Slovenia);

4%Other countries (the EU,

Russia, etc); 3%

Average for All Surveyed Companies

Expectations for the near future

7

2013

2012

2011

9%

12%

8%

60%

58%

47%

31%

30%

45%

Pessimistic Neutral Optimistic

2013

2012

2011

2013

2012

2011

2013

2012

2011

12%

15%

11%

16%

23%

14%

5%

9%

6%

67%

66%

58%

45%

43%

35%

58%

52%

42%

20%

19%

31%

36%

34%

51%

35%

39%

52%Decrease No change Increase

Introduction of new products/services

Net profit

Number of employees

General expectations

Specific expectations

Do you expect increase, decrease or no change in that area/aspect?

8

Gender differences

11.2

2.0

7.4

1.4

MenWomen

Employees (on average)

Owners/Managers (on average)

Work force Ownership structure

78% 79%

69%

15% 13%

26%

Male majority ownedFemale majority owned

Total Enterprises Entrepreneurs

69% of the businesses have only up to 5 female employees

16% of the companies have only female managers, while 61% have only male managers

Significantly more “female businesses” are present among entrepreneurs comparing to enterprises

Business Associations

2011

2012

2013

36%

18%

13%

Training, education and information dissemination

Organization of business fairs and support in placement of products

Advocating to the Government for the regulatory reforms

26%

27%

40%

41%

40%

38%

27%

26%

15%

Negative Neutral Positive

Membership by year

Evaluation 2013

Membership 2013

Total Manufacturing Trade Services Small Medim Large

13% 13%7%

20%12%

23%

33%

Part 2:Policy Legal & Regulatory Issues

10


Summary

Significant ImprovementCorruption

Public procurementBusiness licensing

InspectionsSenior management time dealing with red tape

Transparency and predictability for doing businessPublic private dialogue

Some ImprovementTime and money spent on regulatory issues

Wage taxes and contributionsEnforcement of judgments

Exchange rate volatilityIlliquidity constraints

Duration of loan approval process

No ImprovementConstruction permits

Administrative proceduresPara-fiscal chargesTax administration

InflationInterest rate volatility

Access to financeCollateral requirement

WorseCourt procedures

Labor Law proceduresCustoms and external trade procedures

VAT ratesExcise taxes

Customs dutiesQuality and service of financial institutions

12

Negative Impacts on Businesses

Wage taxes and contributions

VAT

Tax administration

Other obligatory (quasi-fiscal) charges

Administrative procedures

Inspection surveillance

Payment transactions including time and money

Labor law procedures and requirements

Obtaining of the business licenses and related requirements

Obtaining of construction permits and related requirements

Court procedures and requirements

Customs and external trade procedures

81%

61%

49%

77%

62%

43%

31%

34%

37%

38%

43%

28%

77%

61%

63%

75%

70%

43%

43%

39%

42%

44%

49%

33%

72%

66%

65%

74%

66%

25%

44%

45%

33%

48%

52%

40%

2013 2012

2011

Please assess the impact of the following elements on your business (percentage of negative ratings)

13

Time and money spent on regulatory issues

2011

2012

2013

56%

47%

33%

40%

50%

63%

4%

3%

4%

More money

The same amount of money

Less money

2011

2012

2013

47%

37%

31%

49%

56%

66%

3%

7%

3%

More time

The same amount of time

Less time

Mon

eyTi

me

During the last 12 months has your company spent more or less money and time dealing with regulatory issues compared to the previous year?

14

Senior management time spent in dealing with regulatory requirements

2011 2012 2013

Up to 10% of work time 17% 12% 23%

From 10 to 20% of work time 29% 26% 50%

From 20 to 50% of work time 42% 44% 20%

More than 50% of work time 12% 16% 7%

What is the amount of senior management time spent in dealing with regulatory requirements?

15

Corruption in public administration

2011

2012

2013

41%

33%

16%

38%

41%

38%

20%

26%

46%

It affects a lot

Sometimes it affects

Does not affect at all

To what extent does corruption in public administration affect your business?

Effects of corruption on

business

Blackmail by a public servant

2011

2012

2013

4%

2%

1%

8%

6%

5%

88%

92%

94%

Yes, we had to payYes, but we didn't payNo, I have no such experience

Have you experienced blackmailing by a public servant in an administrative procedure?

Reported use of private

connections

2011

2012

2013

21%

10%

8%

33%

40%

20%

46%

51%

72%

Regularly

Rarely

No, never

Have you ever used some private connections in dealing with public administration issues?

16

Public procurement

Total

Total

Total

Total

Total

4.1

3.9

3.2

3.1

2.7

3.7

3.6

3.1

3.3

2.8

3.1

3.1

2.6

3.8

3.1

2013

2012

2011

Connections with political parties

Private connections

Bribing members of the tender panel

The best financial offer

The best technical capacity and experience

Base: Those who have experience with public tenders: (2011=400, 2012=400, 2013=293)

How often the following circumstances contribute to winning on public tenders?

Marks from 1 to 5, 1 meaning never and 5 meaning often

17

Construction permits

Costs related with construction permits are moderate

Construction permits can be obtained in a reasonable time

Construction permits are now easier to obtain than in 2009

Simplification of construction permitting would enable me to expand my business

81%

64%

47%

9%

16%

35%

34%

89%

3%

1%

18%

2%

I don’t agree I agree Don't know

Do you agree with the following statements?

18

Inspections

Tax inspection

Market inspection

Labour inspection

Sanitary inspection

Traffic inspection

Tourist inspection

Environmental inspection

Communal inspection

Veterinary inspection

27.6%

25.6%

22.5%

10.8%

3.2%

2.5%

2.4%

2.1%

2.0%

2011 2012 2013

Average amount of fines imposed 2128 € 1655 € 868 €Average amount of time (in hours) spent by management 70 34 17

Average number of visits in the year before 5.5 6.0 3.1

Average number of visits in the current year 4.8 3.8 2.1

Base: Those who were visited by inspections(816)

Base: Those who were visited by inspections(2011=738, 2012=755, 2013=816)

What was the most frequent inspection in 2012 in your company?

Basic information on inspections:

19

Para-fiscal charges

Administrative taxes

Fees for registration of motor vehicles

Compensation for land use

Company name display fee

Environmental taxes

Fee for use of water resources

21%

20%

25%

28%

33%

38%

45%

41%

32%

34%

25%

21%

8%

17%

10%

10%

11%

not burdensome (1+2) burdensome (4+5) Don't know Refusal Not applicable

How burdensome are the following taxes and charges for business?

20

The enforcement systemHow would you rate the efficiency of the system for enforcement of judgments?

*to achieve reliable comparability, only clearly negative and clearly positive marks were included, due to unequal number of missing values

2011

2012

2013

2011

2012

2013

2011

2012

2013

98%

96%

87%

97%

96%

88%

98%

93%

88%

2%

4%

13%

3%

4%

13%

2%

7%

12%

Poor/Very poor Vey good/Excellent

Total

Enterprises

Entrepreneurs

21

Employment Contracts

No temporarily employed

Between 1 and 5 temporarily employed



More than 20 temporarily employed

41%

34%

12%

8%

5%

65%

25%

4%

3%

3%

72%

20%

3%

2%

2%

201320122011

No permanently employed

Between 1 and 5 permanently employed



More than 20 permanently employed

1%

38%

28%

17%

16%

3%

49%

22%

13%

13%

3%

47%

23%

14%

13%

201320122011

Temporarily employed

Permanently employed

Out of the total number of employees in your business, how many are working on a temporary contract?

Out of total number of employees in your business, how many are permanently employed?

Part 3:Macroeconomic & Finance Issues

22


23

Economic factors related to competitiveness

Inflation

Wage taxes

VAT rates

Exchange rate volatility

Interest rate volatility

Poor access finance

Illiquidity constraints

Asset price volatility

Customs duties

Excise taxes

89%

80%

78%

77%

70%

61%

60%

47%

46%

46%

10%

18%

20%

21%

28%

38%

38%

51%

51%

53%

1%

2%

2%

1%

2%

2%

2%

1%

3%

1%

Negative Neutral Positive

Please evaluate how the following factors affect the competitiveness of your business

24

Grey economy estimates

Pay full contributions

Pay only partial contributions

Pay no contributions at all

73%

15%

12%

73%

15%

11%

69%

13%

18%

Entrepreneurs Enterprises

Total

According to your estimate, out of the total number of employees working in enterprises that operate in the same industry as your company, for what percentage of employees do the enterprises pay (1) full contributions on salaries, (2) only partial contributions on salaries, and (3) no contributions on salaries at all?

25

Budget cuts aimed at reducing taxes

Cuts in foreign investment tax incentives

Cuts in price subsidies

Cuts in subsidized inputs

Cuts in subsidized loans

Cuts in investing in training for business

Cuts in investing in infrastructure

75%

54%

53%

43%

52%

31%

60%

45%

39%

28%

39%

22%

48%

27%

27%

29%

24%

16%

2013

2012

2011

Which budget cuts for government services would you support in order to lower taxes?

Supported budget cuts:

26

Funding sources

81% of total funding comes from business owners themselves

What percentage of your business’ financing comes from…

2012

2013

70%

64%

23%

15%

1%

3%

2%

2%

1%

2%

0%

5%

3%

8%

Banks Family and/or friends LeasingForeign sources of funding Loans by state institutions Grants/Non-repayable fundsOther

27

Types of finance used

Term loansOverdraft

Revolving creditGuarantees

LeasingLetter of Credit

FactoringCorporate Bonds

Issuance of shares

23%39%

61%60%

66%82%85%

88%89%

12%11%

12%9%

10%8%4%

3%

30%19%

11%12%

11%2%

19%16%

6%10%

4%0%

11%9%2%

2%

6%6%

8%7%7%8%9%8%8%

Didnt use

Rarely

Occasionally

Often

All the time

No answer

Term loans

Overdraft

Guarantees

Revolving credit

Letter of Credit

19%

15%

11%

9%

3%

25%

21%

10%

11%

2%

30%

26%

12%

8%

0%

2013

2012

2011

Please indicate the type of finance you have used and how often

Type of finance used often and all the time:

28

Suitability of the available finance

Interest rates and fees

Collateral requirements

Denomination of the loan in foreign currency

Denomination of the loan in local currency (dinars)

Quality of service and support of financial institutions / banks

Duration of loans

Duration of the loan approval process

Reporting requirements by the bank

96%

74%

50%

67%

61%

93%

73%

70%

56%

50%

54%

56%

49%

90%

76%

72%

64%

64%

57%

54%

52%

201320122011

How suitable is the available finance to your needs?

Part 4:Summary of Progress

29


30

Impact of reform effortsTo what extent do you agree or disagree with the following statements?

2011

2012

2013

76%

73%

55%

20%

19%

36%

4%

8%

9%

Disagree (1+2) Neutral Agree (4+5)

Transparency and predictability for doing business in Serbia increased in the last 12 months

2011

2012

2013

74%

68%

56%

22%

23%

33%

4%

9%

11%


Quality of public dialogue and debate on macroeconomic and fiscal issues is improved in the last 12 months

2011

2012

2013

78%

58%

50%

17%

28%

35%

5%

14%

15%


I am aware of and understand the GoS economic growth strategy for businesses

31

Impact of reform effortsTo what extent do you agree or disagree with the following statements?

2011

2012

2013

73%

73%

64%

20%

20%

29%

6%

7%

7%

Desagree (1+2) Neutral Agree (4+5)

The access to finance for your business is improved in the last 12 months

2011

2012

2013

82%

71%

63%

16%

22%

30%

2%

7%

7%


The burden of laws and regulations decreased in the last 12 months

2011

2012

2013

80%

72%

63%

16%

22%

30%

4%

7%

7%


Business ability to participate in reforming laws related to the business environment has improved in the last 12 months

Business Survey 2013 Belgrade November 13, 2013. 2 Business Survey 2013.

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Transcript of Business Survey 2013 Belgrade November 13, 2013. 2 Business Survey 2013.