ASSESSMENT OF CONSTRAINTS TO CONSTRUCTION PERMITS IN THE REPUBLIC OF SERBIA Đor đ e Mančić MP and Associates Douglas Muir USAID BEP Expert

INTRODUCTION, AIMS AND METHODOLOGY Quality of legal and administrative framework for construction Ensure adherence to strategy papers and principles of sustainable development; Strict adherence to principles of administrative proceedings, with particular attention paid to full protection of parties interests; Environmental protection, and Safeguarding people and possessions

EXAMPLE: INVESTMENT Construction of 3,000 sq. m production plant on a 1.5 hectare plot of land Textile industry, 300 workers Selected municipality has several industrial parks provided with infrastructure and planning documents Investor in a hurry: contracts with foreign buyers, opportunity for profit

TASK 1: PURCHASE LAND Attempt 1: state-owned land Attempt 2: privately-owned land Attempt 3: assets of bankrupt company Attempt 4: privately-owned land 2 Takes 15 months

TASK 1: PURCHASE LAND – KEY ISSUES Inconsistent and incoherent land management policy Transition of property rights jeopardises legal security Land with appropriate infrastructure cannot be used due to administrative procedures Inadequate participation of parties and lack of transparency in drafting of spatial and urban plans

RECOMMENDATIONS Introduce consistent and coherent policies Use existing resources and create added value through industrial zones Transfer of title to state-owned land zoned for construction onto local authorities Public participation at end of each phase of drafting planning documents Enable use of state-owned property for constructing infrastructure as soon as location permit is obtained Ensure access to under-utilised or inappropriately utilised agricultural or army-owned land

TASK 2: OBTAIN LOCATION PERMIT Obtain technical conditions from appropriate public enterprises (urban planning, electricity, water supply, water management, sewage, roads, fire department, etc.) 12 institutions 55 contacts between investor and institutions Takes 100 days

TASK 3: OBTAIN CONSTRUCTION PERMIT Appropriate public institutions must verify project documents 8 appropriate institutions Takes days, plus time needed to develop project

RESULTS 200 days spent Unforeseen high costs (project staff, consultants, etc.) and long duration Delayed profits, contracts with purchasers Investor was lucky?

LOCATION AND CONSTRUCTION PERMIT: KEY ISSUES At least 20 construction permits Numerous contacts with fragmented administration Institutions act irresponsibly, break regulations and deadlines Bureaucratic mindset, rigidity and lack of flexibility in meeting users needs No quality management (tasks, oversight, accountability and sanctions) No coordination between institutions or consistency in action

WHY THIS IS SO Lack of alignment between regulations (sector laws contrary to Law and Planning and Constructions concept; new levels of oversight) Inappropriately organised public administration (centralised administration, public enterprises lack accountability, capacities and quality management, and have opportunistic interests) Fragmented public administration and lack of single channel of communication (OSS) Weak institutional and human capacities

RECOMMENDATIONS Eliminate unnecessary steps and control points in process; entrust professional quality assessment to private sector - Align sector laws with the Law on Planning and Construction (remove powers of public enterprises) - Conditions to be set by single body - Technical oversight instead of consent Define precise content and quality of urban planning and technical conditionality as basis for location permit

Decentralise decision-making in construction permitting: local authorities should have all powers (one-stop-shop) - Delegation or authority of last resort - Model OSS system - Abolish public enterprises monopoly on information: public information systems and exchange of information - Quality management in public authorities (aims, flowcharts, procedures, accountability, controlled duration, sanctions) RECOMMENDATIONS

RECOMMENDATIONS: BEST INTERNATIONAL PRACTICES Industrial parks Capacity building (quality control): - Document management system - Geographical information system E- government - Government to government - User to Government

RESULTS IN THE INTERNATIONAL CONTEXT How many of these issues are solved problems? Experience of other transitional countries (Slovenia, Czech Republic, Macedonia, Georgia) What about the World Bank doing business indicators?

RESULTS ON THE WB RANKING Serbias overall ranking for this indicator would rise from 175 th in the world, to 109 th.

ECONOMIC IMPACT? Currently Serbias construction sector is underperforming, at 4.2% of GDP (OECD average is 6.1%) The experience of other countries suggests that construction sector reform can provide a very fast hit of jobs and economic activity Construction is a sector with a high multiplier effect

EFFECTS Greater supply of locations for investment and use of dead resources Stakeholder participation in planning process Proceedings cut by at least 100 days 20 procedures eliminated More efficient and accountable public administration – much better service for investors One channel of communication between investors and administration

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