Business Survey 2014 Belgrade November 21, 2014 #1000preduzeca.

Business Survey 2014

Belgrade

November 21, 2014#1000preduzeca

Methodology


#1000preduzeca

Methodology

Realization: research was conducted in the period between 3rd of September and

1st of October 2014

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: 1009 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

#1000preduzeca

Description of Surveyed Businesses


#1000preduzeca

Item Measure

# Companies participating in survey / # invited 1009 / 3988

Founded before / after 2000 48% / 52%

Profitable / unprofitable 2011-132011: 90% / 10%2012: 88% / 12%2013: 86% /14%

Characteristics of Surveyed Companies

5, 39%

5 - 10; 29%

10 - 20; 16%

20, 17%

Employment€ 100,000, 29%

€ 100,000 - 500,000; 39%

€ 500,000, 30%

Annual Revenues

% of participants in survey

#1000preduzeca

Gender differences

11.2

2.0

7.8

0.6

MenWomen

Employees (on average)

Owners/Managers (on average)

Work force Ownership structure

78% 80%

64%

13% 11%

28%

Male majority ownedFemale majority owned

Total Enterprises Entrepreneurs

Women make up 36% of employees and 27% of managers.

Men own more than half of the company in 78% of firms

#1000preduzeca

Sales by Market

Hometown; 62%

Other towns / regions; 30%

Former Yugoslavia coun-tries (excluding Slovenia);

5%Other countries (the EU,

Russia, etc); 3%

Average for All Surveyed Companies

#1000preduzeca

Business Associations

2011201220132014

36%18%

13%12%

Training, education and information dissemination

Organization of business fairs and support in placement of products

Advocating to the Government for the regulatory reforms

25%

21%

26%

35%

42%

50%

37%

33%

17%

Negative Neutral Positive

Membership by year

Evaluation 2014

Membership 2014

Total Manufacturing Trade Services Small Medim Large

12% 11% 7%18%

11%17%

38%

#1000preduzeca

Expectations for the near future

9

Specific expectations

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

2014

2013

2012

2011

2014

2013

2012

2011

2014

2013

2012

2011

10%

12%

15%

11%

15%

16%

23%

14%

7%

5%

9%

6%

61%

67%

66%

58%

37%

45%

43%

35%

56%

58%

52%

42%

26%

20%

19%

31%

43%

36%

34%

51%

31%

35%

39%

52%

Decrease No change Increase

Introduction of new products/services

Net profit

Number of employeesNumber of employ-ees

2014 14% 38% 44% 4%

Decrease No change Increase Refusal

Total revenue

#1000preduzeca

Reform Impact


#1000preduzeca

What changed in the last year?

Significant ImprovementInformation about reforms

Business participation in reformsSenior management time dealing with red tape

Procedures for payment of wage taxes and contributions

Type of collateral required by banks

Some ImprovementTime and money spent on regulatory issues

Para-fiscal chargesWage taxes and contributions

Administrative proceduresCourt procedures

Inspection surveillanceConstruction permits (time)

Labor lawCustoms and trade procedures

Customs dutiesExcise taxes

Service in financial institutions

No ImprovementTax administration

Payment transactionsBusiness licenses

CorruptionInflation

Shadow EconomyBank interest rates and fees

Amount of collateral required by banks

WorseAccess to finance

Construction permits (cost)Fairness in public procurement

VAT rateExchange rate volatility

Evaluation of New Reforms

Increase of VAT rate

Increase of penalties for tax violations

Amendments to the Labor law

Amendments of procedures for certification of health cards

Inclusion of tax inspectors

Adoption of stimulating measures for employment

Amendments of procedures for registration and deregistration of employees

Process of registration real estate rights

Extension of the deadline for for the submission of the VAT returns

Submission of annual financial report to Business Registry

Submission of tax decisions by mail

Consolidated payment of taxes and contributions

70%

32%

19%

18%

17%

17%

14%

8%

8%

7%

7%

7%

25%

40%

52%

44%

51%

51%

41%

52%

35%

46%

38%

31%

2%

17%

23%

32%

24%

27%

37%

20%

54%

41%

51%

58%

1%

4%

1%

0%

2%

2%

2%

10%

0%

0%

0%

2%

7%

5%

6%

6%

4%

6%

11%

3%

5%

4%

4%

Negative (1+2) Neutral Positive (4+5) Not applicable Don't know/ Refusal

#1000preduzeca

What changed from 2011 to 2014?

Significant ImprovementInspection surveillance

CorruptionTransparency & predictability

Quality of public dialoguePublic procurement

Wage taxes and contributionsManagement time dealing with regulations

Duration of loan approval process

Some ImprovementPara-fiscal chargesBusiness licenses

Enforcement of judgmentsType of collateral required for loans

Interest rates and loan feesDuration of loan term

Business association services

No ImprovementInflation

Exchange rate volatilityCustoms duties

Tax administrationAdministrative procedures

Payment transactionsConstruction permits

Labor lawCustoms procedures

Amount of collateral required for loans

WorseCourt procedures

Availability of financeType of finance used

VATExcise taxes

Quality of service in banksReporting requirements by banks

Time and money spent on regulatory issues M

oney

Tim

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

2011

2012

2013

2014

56%

47%

33%

28%

40%

50%

63%

66%

4%

3%

4%

5%

More money

The same amount of money

Less money

2011

2012

2013

2014

47%

37%

31%

22%

49%

56%

66%

69%

3%

7%

3%

9%

More time

The same amount of time

Less time

#1000preduzeca

Senior management time spent in dealing with regulatory requirements

2011 2012 2013 2014

Up to 10% of work time 17% 12% 23% 29%

From 10 to 20% of work time 29% 26% 32% 28%

From 20 to 50% of work time 42% 44% 33% 35%

More than 50% of work time 12% 18% 12% 9%

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

#1000preduzeca

Corruption, Transparency, & Gray Economy


#1000preduzeca

Corruption in public administration

2011

2012

2013

2014

41%

33%

16%

17%

38%

41%

38%

42%

20%

26%

46%

42%

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

2014

4%

2%

1%

1%

8%

6%

5%

4%

88%

92%

94%

95%

Yes, we had to pay

Yes, but we didn't pay

No, I have no such expe-rience

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

Reported use of private

connections

2011

2012

2013

2014

21%

10%

8%

5%

33%

40%

20%

27%

46%

51%

72%

68%

Regularly

Rarely

No, never

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

#1000preduzeca

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

3.4

3.2

3

3.7

2.9

2014201320122011

Connections with political parties

Private connections

Bribing members of the ten-der 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

#1000preduzeca

Grey economy estimates

Pay full contributions

Pay only partial contributions

Pay no contributions at all

73%

15%

12%

74%

14%

12%

20142013

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?

#1000preduzeca

Regulatory Framework


#1000preduzeca

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%

69

67

62

70

61

28

44

41

34

43

50

35

2014

2013

2012

2011

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

#1000preduzeca

Inspections

Tax inspection

Market inspection

Labour inspection

Sanitary inspection

Traffic inspection

Tourist inspection

Environmental inspection

Communal inspection

Veterinary inspection

26.0%

33.0%

28.0%

8.0%

3.0%

0.0%

3.0%

2.0%

2.0%

2011 2012 2013 2014

Average amount of fines imposed 2128 € 1655 € 868 € 2022€Average amount of time (in hours) spent by management 70 34 17 12

Average number of visits in the year before 5.5 6.0 3.1 2.2

Average number of visits in the current year 4.8 3.8 2.1 1.6

Base: Those who were visited by inspections(754)

Base: Those who were visited by inspections(2011=738, 2012=755, 2013=816, 2014=754)

What was the most frequent inspection in 2013 in your company?

Basic information on inspections:

#1000preduzeca

Construction permitsDo you agree with the following statements?

2014

2013

2012

2011

2014

2013

2012

2011

2014

2013

2012

2011

59%

64%

64%

70%

25%

9%

10%

13%

85%

81%

66%

65%

41%

35%

9%

6%

66%

89%

57%

59%

15%

16%

7%

3%

1%

27%

24%

9%

2%

33%

28%

3%

27%

32%

I don't agree I agree Don't know

Costs related with con-struction permits are mod-

erate

Simplification of con-struction permitting

would enable me to ex-pand my business

Number of employeesConstruction permits can be obtained in a reason-

able period of time

#1000preduzeca

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

Base: Private business entities with 3 or more employees:

2011 (N=913), 2012 (N=1020), 2013(N=1029) and 2014 (1009)

Comparison across waves: Total

2011

2012

2013

2014

86%

80%

61%

66%

13%

16%

29%

27%

2%

4%

9%

7%

Very poor/Poor Good Very good/Excellent

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

#1000preduzeca

Hiring Employees


2014 (N=1009)

Please give your reasons that caused you to limit hiring or retaining employees in the past 12 months.

There was no need for new workers due to market conditions

We've hired new people / does not apply to us

Amount of taxes and social contributions

Wages are too high given productivity levels

Lack of qualified employees

Labor law provisions limited fixed term contracts

Paperwork involved in hiring and/or retaining employees

Labor law provisions on severance pay

Labor Law restrictions on firing

Political risks

Other, what?

64%

20%

12%

6%

3%

2%

2%

2%

1%

1%

0%

#1000preduzeca

Taxes & Charges


#1000preduzeca

The Most Negative External Factors

Other obligatory (quasi-fiscal) charges (communal tax etc.)

Wage taxes and contributions

VAT

Grey economy

Tax administration

Administrative procedures

3

4

4

2

4

5

69

69

65

62

61

60

PositiveNegative

#1000preduzeca

Macroeconomic Policy


#1000preduzeca

29

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

88%

74%

78%

83%

70%

59%

66%

51%

40%

42%

12%

24%

20%

16%

28%

38%

32%

47%

56%

56%

3%

1%

1%

1%

3%

2%

2%

4%

2%

Negative Neutral Positive

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

#1000preduzeca

Access to Finance


#1000preduzeca

Funding sources

85.2 %

9.7 %

5.1 %

Own FundsBanksOther

#1000preduzeca

Reasons for Not Borrowing


2014 (N=1009)

If you did not borrow money in the last 12 months, why not?

Used owner’s equity instead of a loan

Have a borrowing need and bank products were not suitable for my needs or risk profile

Have a borrowing need, but decided not to borrow because bank requirements take too much time/cost

Were declined a loan

I did not meet the requirements to obtain a bank loan

Have no need for credit

Refusal

14%

6%

6%

2%

2%

49%

21%

#1000preduzeca

Types of finance used

Term loansOverdraft

Revolving creditGuarantees

LeasingLetter of Credit

FactoringCorporate Bonds

Issuance of shares

21%30%

58%62%62%

79%82%86%85%

15%13%

17%13%13%

8%6%

6%

31%22%

12%10%10%

3%

19%19%

4%6%5%

2%

9%10%

2%

2%

7%7%7%7%7%8%8%8%7%

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%

27%

29%

9%

6%

2%

2014

2013

2012

2011

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

Type of finance used often and all the time:

#1000preduzeca

Suitability of the available finance How suitable is the available finance to your needs?

Interest rates and fees

Collateral requirements

Denomination of the loan in foreign currency

Denomination of the loan in local currency (d-inars)

Quality of service and support of financial insti-tutions / 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%

91%

77%

72%

60%

58%

55%

51%

54%

2014201320122011

#1000preduzeca

Business Survey 2014 Belgrade November 21, 2014 #1000preduzeca.

Documents

Transcript of Business Survey 2014 Belgrade November 21, 2014 #1000preduzeca.