ECONOMY

World Bank study notes Greece’s slow procedures for new firms

Prospective entrepreneurs in Greece must slog through some 16 different procedures and 45 days to establish a new company, according to a recent World Bank study measuring bureaucracy levels in various countries. The study, whose factors include the number of procedures required and days needed to secure a new firm’s operating license, ranks Greece among the world’s lowest-ranked nations. With its requirement of getting through 16 phases, Greece ranked higher only than Uganda, Paraguay, Bolivia, Algeria, Belarus, Chad, and Colombia, where the number of procedures required range between 17 and 19. A total of 132 countries are listed. Business gets off the ground quickest in Australia, where it takes a mere two days to set up a new firm, while Canada and New Zealand follow with three days, the study noted. The longest time required is in Congo and Haiti, with 215 and 213 days respectively. While the Greek government regularly announces measures aimed at drawing foreign investment and bolstering local business activity – initiatives that absorb significant funds from the Third Community Support Framework – it takes less time to set up a new business in countries such as Rwanda, Romania, and Mongolia, the World Bank study said. The study also correlated extensive bureaucracy with higher costs in setting up a new business. Problems were greatest in the world’s poorer nations, the World Bank study found. In Denmark, for example, it costs absolutely nothing to establish a new firm, while in Greece the procedure costs a new entrepreneur nearly 70 percent of the country’s per capita annual income. In this department, Greece ranks among the lowest in the study. In the USA, it costs new entrepreneurs a mere 0.6 percent of annual income per capita to tame the beast called bureaucracy. In Sweden, making it through the red tape also costs relatively little, just 0.8 percent of the Scandinavian country’s annual income per capita figure. The cost in less developed countries such as Morocco, Argentina, or Kazakhstan amounts to about $8,000 in duties and taxes, which is less than in Greece. Greece also ranked poorly in a category examining the amount of initial equity capital needed to start up a new firm, which, the study supported, stood at 145.3 percent of annual per capita income. The respective figure in most other European countries does not exceed 80 percent. Of course, some cases are far worse than Greece’s. In Syria, the initial equity capital needed to launch a company is a staggering 56 times the country’s annual income per capita figure, and in Yemen the figure is 17 times over. The World Bank’s study points out the obvious: The greater the level of bureaucracy that has to be surmounted in establishing a company, the greater the level of corruption. For increased efficiency, the study’s suggestions included computerizing application procedures, lowering start-up costs – as is the case in Australia, Canada, and New Zealand, to bolster business activity – and not listing initial equity capital as a prerequisite, as is the case, for example, in Ireland, a fellow EU member. In its bid to strengthen business activity, the Greek government – in theory at least – is making efforts to adopt the Irish model. However, the figures of this World Bank study, as well as others supplied by studies on innovation and foreign investment, all find Greece still lagging behind the rest of the European Union.