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The Business Environment
Index
Business Alliance of Slovakia (PAS) from
2001 quarterly monitors and evaluates the quality of
business environment in Slovak Republic by its own Business
Environment Index (BEI).
Through BEI one can track the overall
development of the business environment in Slovakia
and partial changes in quality of particular components
of the business environment, i.e. changes in government's
economic policy, legislation or in level of infrastructure,
etc. BEI is based on results of regular surveys of feelings
among managers, who (based on their own experience)
evaluate current development in monitored segments of
business environment.
Ambition of PAS is that BEI would become
reliable barometer for monitoring business environment
in Slovakia. Its founders hope that it will be an inspiration
for policy makers to introduce proper decisions. In
2007, the index's first category evaluating the quality
of regulation and legislation environment became one
of progress indicators in National Reform Programme
of the Slovak Republic approved by the Slovak government.
The quality of business environment
in Slovakia continues to worsen in the 4th quarter of
2009
In the last quarter of 2009 the Business
Environment in Slovakia has significantly worsened again.
Current value of Business Environment Index, that is
evaluated by Business Alliance of Slovakia on the basis
of results of its own survey, is 97.4 points, which
represents a decrease of 3.91% in comparison with the
previous period. Value of index is lower than the reference
level of 100 points for the first time in its history.
This perceived downgrade of business conditions reflects
negative effects of crisis on business and also insufficient
government activities against crisis and business barriers.
The biggest fall in fourth quarter of
2009 recorded the item "Law enforcement, judicial
effectiveness". This field has been one of most
criticized over a long period of time. In this quarter
the rating decreased by significant 11.86% to current
value 28.9 points. Entrepreneurs complain mostly about
duration of judicial proceedings, performance of judicial
decisions, insufficient competency and neutrality of
judges. They would appreciate an increase in requirements
on moral values of judges. Still more entrepreneurs
are concerned about low effectivity of protection of
creditors, which is indicated by low success in enforcement
of claims.
The second biggest fall assigned entrepreneurs
to the item "Efficiency of state economy and access
to the state aid" that dropped by 11.43% to current
value 37.2 points. Entrepreneurs rate through this item
the effectivity and fairness of the financial state
aid to private business enterprises and also effectiveness
of state expenditures. In spite of negative impact of
the crisis on tax revenue, the government has not re-evaluated
expenses of the state budget yet and has not implemented
radical expenditure cuts in all budget sections either.
The result of this inactivity together with the ever
biggest state deficit planned for 2010 is a major increase
of the state debt, which leads not only to decline of
the state credibility, but also threatens the long-term
tenability of public finances.
The third largest decrease in comparison
with the previous quarter was assigned to the "Functionality
of political system in the country", with a decrease
of 9.82% to current value 45.6 points. Negative evaluation
is caused by regulative interventions of government
and unpredictability of amendments to law. Also remains
criticized the lack of interest from side of highest
state representatives about solving important cases
and punishing ministers and officers that have failed
in their duties.
Other chronical and still unsolved business
barriers recorded also very negative ratings. Except
the above mentioned poor law enforcement entrepreneurs
also criticize payroll taxes legislation, and low understandability
and steadiness of enactments. Criticized is also an
increase of corruption, to which partially contributes
lack of interest of the government for careful investigation
of the non-transparent state orders. Affected by crisis,
entrepreneurs started to have great problems with the
deterioration of the financial discipline of business
partners. Access to financial resources is also more
difficult. The items that reflect the above mentioned
areas started to decline slightly from the middle of
previous year and recorded the major decrease from the
beginning of the year 2009. Entrepreneurs declare negative
trend in profits, liquidity and also cash flow of their
companies.
The highest increase in comparison with
the previous quarter achieved the item "Stability
and predictability of the EUR exchange rate", that
is related to stability of exchange rate against the
currencies of main business partners of Slovakia. Another
benefit stemming from this measure is a more accurate
ability to plan revenues in foreign trade. The second
biggest increase achieved the item "Quality and
accessibility of primary inputs and labour force".
Rating grew up as a result of redundancy that increased
the supply of free qualified workforce. These two are
the only external items affecting business that increased
their rating in the fourth quarter of the year 2009.
The
base date for the initial BEI listing was the 1st of
July 2001, with the reference value of 100 points for
each of 33 BEI components. The latest listing of BEI
was the thirty-fourth and was tracking the changes in
the 4th quarter of 2009. Analyzing business environment
gives answer to creators of economic policy, where their
effort Is positive and where it is useful to apply principal
actions. BEI's result, among others, used OECD in Economic
Surveys about Slovakia and Ministry of Economy of the
Slovak Republic in its regular Business Environment
Report.
The
Index consists of three broad categories. The first
category has 12 components and looks at the legislative
and regulatory developments in Slovakia, such as the
business legislature, tax-, contribution- and investment
legislature, law enforcement, market regulations and
others. The second one has 11 components and assesses
the influence of other external macroeconomic factors
on businesses, including price stability, exchange rate
movement, fiscal policy, the infrastructure standard,
and so on. Finally, the third category of the Index
has 10 components and tracks the member companies' own
perception of their immediate business prospects and
relationships. Each of the 33 items in the BEI has its
own weight, so the Index represents a weighted arithmetical
average of the changes in individual items.
This
activity is unique in the CEE countries. The BEI was
inspired by other indexes, though they mostly observe
also quantitative figures. PAS wanted to create a purely
qualitative tool to determine the changes in business
environment. With the help of BEI, now it is possible
to track the changes in business environment on a quarterly
basis. It is also easy to observe, how specific legislative
initiatives influence the Index. PAS can thus immediately
evaluate the adopted measures, and manifest the entrepreneurs'
point of view to the government actions.
Complete
results of BEI since 2001 till the 4th quarter of 2009
(.xls format)
Archive:
Business
environment index in 3rd quarter of 2009
Business
environment index in 2nd quarter of 2009
Business environment
index in 1st quarter of 2009
Business
environment index in 4th quarter of 2008
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