Business Survey 2015 Belgrade November 25, 2015 #1000preduzeca

Business Survey 2015 #1000preduzeca

Methodology Realization: research was conducted in the period between 10 th of September and 6 th of October 2015 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 (2014) Sample size: 1008 business entities Sample type: Representative, one-stage stratified sample 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

Business Survey 2015 #1000preduzeca

ItemMeasure # Companies participating in survey / # invited1008 / 4000 Founded before / after % / 55% Profitable / unprofitable : 91% / 9% 2013: 89% / 11% 2014: 88% /12% Characteristics of Surveyed Companies % of participants in survey #1000preduzeca

Gender differences EmployeesOwners/Managers Work force Ownership structure Total Enterprises Entrepreneurs Women make up 33% of employees and 31% of managers. Men own more than half of the company in 78% of firms #1000preduzeca

Sales by Market Average for All Surveyed Companies #1000preduzeca

Business Associations Membership by year Evaluation 2015 Membership 2015 #1000preduzeca

Expectations for the near future 9 Specific expectations Do you expect increase, decrease or no change in that area/aspect? #1000preduzeca

Results in the past year 10 Specific results Did the following aspects increase, decrease or no change in the previous year? #1000preduzeca

Business Survey 2015 #1000preduzeca

What changed in the last year? Obtaining construction permits Exchange rate volatility Inflation Enforcement of court decisions VAT rates Obtaining business licenses Compliance in payment of salary contributions Customs and external trade procedures Value of collateral required for loan Effect of corruption on business Transparency & predictability in doing business Court procedures & requirements Labor Law procedures & requirements VAT procedures Payment transactions (time & money) Money spent on regulatory issues Ability to participate in reforming laws Use of connections to deal with administration Wage taxes and contributions Interest rate volatility Tax administration Public procurement Administrative procedures Inspection surveillance VAT payment procedures Para-fiscal charges Senior management time with regulations New credit from banks Amount of lending from family & friends Time spent on regulatory issues Public administration’s efficiency Infrastructure necessary for doing business Asset price volatility Customs duties Excise taxes Amount of bank financing Bank products & services Public dialogue on macroeconomic issues Awareness of Government economic strategy Membership in business associations Efficiency of business associations #1000preduzeca Significant Improvement Some Improvement No Improvement Worse

Evaluation of New Reforms #1000preduzeca

What changed from 2011 to 2015? #1000preduzeca

Time and money spent on regulatory issues During the last 12 months has your company spent more or less money and time dealing with regulatory issues compared to the previous year? #1000preduzeca Money Time

Senior management time spent in dealing with regulatory requirements What is the amount of senior management time spent in dealing with regulatory requirements? #1000preduzeca

Business Survey 2015 #1000preduzeca

Corruption in public administration Effects of corruption on business Blackmail by a public servant Reported use of private connections Giving a gift/money in exchange for a service #1000preduzeca

Public procurement Base: Those with experience with public tenders: (2011=400, 2012=400, 2013=293, 2014=284, 2015=270) 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 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

Business Survey 2015 #1000preduzeca

Negative Impacts on Businesses Please assess the impact of the following elements on your business (percentage of negative ratings) #1000preduzeca

Para-fiscal charges Focus Groups Participants’ Statements #1000preduzeca “When we make a calculation for some product which we want to sell – we are not sure which profit to plan, because how can we know if they will calculate 100, 200, 300, 500, or Euros more annually for some imposts.” Owner of micro enterprise

Inspections Average amount of fines imposed2128 €1655 €868 €2022 € 1148 € Average amount of time (in hours) spent by management Average number of visits in the year before Average number of visits in the current year Base: Those who were visited by inspections (748) Base: Those who were visited by inspections (2011=738, 2012=755, 2013=816, 2015=754) What was the most frequent inspection in 2014 in your company? Basic information on inspections: #1000preduzeca

Construction permits Do you agree with the following statements? #1000preduzeca

The enforcement system How 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) 2014 (1009) and 2015 (1008) Comparison across waves: Total *to achieve reliable comparability, only clearly negative and clearly positive marks were included, due to unequal number of missing values #1000preduzeca

Enforcing contracts in courts Focus Groups Participants’ Statements #1000preduzeca “I have been suing a man for issuing promissory notes without coverage, and the case has lasted for eight years. Imagine, eight years!” Owner of micro enterprise “One enterprise from Surčin owed money to me. At first I waited for five or six months, then I sent them a warning, and I waited another 15 days. They didn’t appeal against my letter, so I filed a lawsuit in Belgrade; not in Subotica, because the debtor’s headquarters are in Belgrade. I waited for almost four weeks to get a decision from the Court on the basis of which to pay the fee, that is, two fees at once - the first fee for filing a lawsuit, and the other one for collecting the money. But, will I ever collect my money – no one knows that!... I paid two fees... I lost the whole month on that. When I paid the taxes I was instructed to go for enforced collection. I waited for another month. Then, after a month I was informed that they filed an appeal. How could he file an appeal after the expiry of the term for appeal? Nevertheless, they admitted the appeal. He is complaining about calculation of tax, although I was not the one who calculated the tax, the tax is calculated legally, but he filed a formal appeal. I will go to Belgrade, and I will have to present the same evidence that I have already presented to the court. I will go to Belgrade to lose yet another day. I suppose that nothing will happen again because of some legal ploy. I [still] haven’t been able to reveal the destiny of my dinars.” Owner of micro enterprise

Business Survey 2015 #1000preduzeca

Economic factors related to competitiveness Please evaluate how the following factors affect the competitiveness of your business #1000preduzeca

Economic factors Please evaluate how the following factors affect the competitiveness of your business #1000preduzeca

Exchange Rate Focus Groups Participants’ Statements #1000preduzeca “Stable exchange rate is very important for business operations. With each variation, even minimum, expected inflation is calculated, expected change of change rate and it creates total chaos.” Representative of small enterprise

Business Survey 2015 #1000preduzeca

Funding sources #1000preduzeca

Reasons for Not Borrowing Base: Private business entities with 3 or more employees: 2015 (N=1008) If you did not borrow money in the last 12 months, why not? #1000preduzeca

Small business finance #1000preduzeca “It is very hard to plan anything here. I am not sure that I will be operating in two years’ time. My experience and knowledge and options are growing, but competition is vast. It’s probably the same everywhere.“ Owner of micro enterprise “I don’t like loans and I don’t take them, this is the first time that I have taken a loan. I have that load now and that’s why I chose the shortest possible period of 12 months and I keep thinking about it. Also, we are all operating in a very unstable market, we don’t know whether we will be working tomorrow and whether we will be able to repay that loan... Or in my case at least situation is never stable, so I’m not comfortable with this and I can’t wait to repay it.” Director of micro enterprise “ I’ve talked to the Development Fund, gave them my documents, they said that I shouldn’t even try because specific parties to this get their share, one gets , the other one ” Owner of micro enterprise Focus Groups Participants’ Statements

Types of finance used 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? #1000preduzeca Negative Ratings

Collateral Requirements What was the approximate proportional value of the collateral (mortgages, pledges, etc.) required compared to the amount of the loan?