BUSINESS ENABLING ENVIRONMENT PROGRAM FINAL REPORT JULY 2010 – JULY 2013

July 11, 2013 This report was produced for review by the United States Agency for International Development. It was prepared by the USAID Business Enabling Environment Program implemented by Chemonics International.

BUSINESS ENABLING ENVIRONMENT PROGRAM FINAL REPORT JULY 2010 – JULY 2013

Consortium Members:

Baja Group Consulting Blue Crest Group Crimson Capital

Contract Number:

EEM-1-00-7-00008-00 Task Order 11

Contracting Officer Representative: Dardane Peja Chief of Party:

Terry Slywka

*Cover photos above show pre-apprenticeship vocational training on reinforced masonry (top-left); the import of product into Kosovo (top-right); the Credit Registry software upgrade launch event (bottom-left); and a clip from the Doing Business 2013 Kosovo public outreach campaign (bottomright) DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

CONTENTS EXECUTIVE SUMMARY........................................................................................................ 1 CONSOLIDATED LESSONS LEARNED AND RECOMMENDATIONS ......................... 8 ASSISTANCE OBJECTIVE 2 ............................................................................................... 12 ASSISTANCE OBJECTIVE 3 ............................................................................................... 13 PERFORMANCE AGAINST PBMP .................................................................................... 14 PROJECT ACTIVITY SUMMARY ....................................................................................... 15 COMPONENT ONE: IMPROVED RULES AND REGULATIONS .................................. 15 C1-1: SUPPORT MUNICIPAL REFORMS THROUGH USAID|BEEP AND PARTNERSHIP PROGRAM MUNICIPAL COORDINATORS USING THE MUNICIPAL COMPETITIVENESS INDEX (MCI) AND PURSUE OPPORTUNITIES TO INSTITUTIONALIZE THE MCI .......................................................................... 15 C1-2: SUPPORT NATIONAL BUSINESS ENVIRONMENT IMPROVEMENT (DOING BUSINESS) ........... 18 C1-3: SUPPORT NATIONAL BUSINESS ENVIRONMENT IMPROVEMENT (NON-DOING BUSINESS) .............................................................................................................................................................................. 25 C1-4: INCREASE PUBLIC ACCESS TO AND KNOWLEDGE OF LAW AND LEGAL REFORMS THROUGH DEVELOPMENT OF LAW ON NORMATIVE ACTS AND LEGAL INFORMATION DATABASE; AND STRENGTHEN THE OFFICE OF THE PRIME MINISTER.................................................... 35

COMPONENT TWO: REDUCED BARRIERS TO TRADE .............................................. 38 C2-1: IMPROVE THE LEGAL FRAMEWORK FOR IMPORT AND EXPORT TRANSACTIONS ................ 38 C2-2: SUPPORT FOR STREAMLINED IMPORT AND EXPORT PROCESSES .................................................. 43 C2-3: BUILD CAPACITY TO INSTITUTIONALIZE TRADE BEST PRACTICE ................................................ 46 C2-4: DEVELOP AND PUBLISH INTERNATIONAL TRADE GUIDE (ITG) TO PROMOTE TRADE PREDICTABILITY ................................................................................................................................................................ 51

COMPONENT THREE: REDUCED RISKS OF LENDING IN THE FINANCIAL SECTOR ................................................................................................................................. 53 C3-1: REVIEW WORLD BANK’S DOING BUSINESS REPORT AND MONITOR PERFORMANCE IN THE GETTING CREDIT INDICATOR .................................................................................................................... 53 C3-2: FINALIZE UPGRADE TO THE CBK PUBLIC CREDIT REGISTRY ........................................................... 54 C3-3: SUPPORT FOR LEGAL, REGULATORY, AND INFORMATIONAL REFORM IN THE FINANCIAL SECTOR ......................................................................................................................................................... 57

ANNEX 1: SUPPLEMENTAL REPORTING ...................................................................... 61 ANNEX 2: ECONOMIC IMPACTS OF REFORMS (PR2) ................................................ 83 ANNEX 3: MUNICIPAL COMPETITIVENESS INDEX PERFORMANCE (PR3)........... 86 ANNEX 4: STRATEGIC STUDIES AND PROJECTS FUND ........................................... 90 ANNEX 5: FINANCIAL REPORTING................................................................................ 92

ACRONYMS AENOR

Spanish Association for Standardization and Certification

AmCham

American Chamber of Commerce

AI

Administrative Instruction

AO

Assistance Objective

AUK

American University of Kosovo

BEEP

Business Enabling Environment Program

CBK

Central Bank of Kosovo

CLDP

Commercial Law Development Program

CRK

Credit Registry of Kosovo

DB

Doing Business

DEMI

Democratic Effective Municipalities Initiative

DOC

Department of Commerce

DPS

General Directorate of Standardization

GFSI

Growth and Fiscal Sustainability Initiative

GiZ

German Society for International Cooperation

GoK

Government of Kosovo

IFC

International Finance Corporation

IPAK

Investment Promotion Agency of Kosovo

ISO

International Organization for Standardization

ITG

International Trade Guide

KBRA

Kosovo Business Registration Agency

KCC

Kosovo Chamber of Commerce

KSA

Kosovo Standardization Agency

KTC

Kosovo Tourism Council

LID

Legal Information Database

LO

Legal Office

MC

Municipal Coordinator

MCI

Municipal Competitiveness Index

MESP

Ministry of Environment and Spatial Planning

MoF

Ministry of Finance

MPA

Ministry of Public Administration

MTI

Ministry of Trade and Industry

NCED

National Council on Economic Development

OPM

Office of the Prime Minister

PBMP

Performance Based Monitoring Plan

PEFA

Public Expenditure and Financial Accountability

PR

Project Result

SCAAK

Society for Certified Accountants and Auditors of Kosovo

SMIS

Standards Management Information System

SSPF

Strategic Studies and Projects Fund

TAK

Tax Administration of Kosovo

UNDP

United Nations Development Programme (UNDP)

USAID

United States Agency for International Development

USG

United States Government

VAT

Value Added Tax

WB

World Bank

WCC

Women’s Chamber of Commerce

EXECUTIVE SUMMARY The United States Agency for International Development Business Enabling Environment Program (USAID|BEEP) is an innovative three-year initiative by USAID leveraging the successful methodology applied in other countries to use third-party measures of performance to drive cross-cutting reforms, while pursuing holistic strategies taking into account all aspects of the legal environment for economic activity and collaboration with other donors and projects. This report is the Business Enabling Environment Program’s (the Project’s) Final Report and captures achievement of Project goals as stated in the Performance Based Monitoring Plan (PBMP) and further describes project activity from July 2010 – July 2013. Just as important as the activities and results undertaken as detailed below is the foundation that USAID|BEEP leaves to build upon in the future.

USAID|BEEP Laying the Foundation for the Future 

Annual Municipal Competiveness Survey



First Consolidated and CrossReferenced Database of the Entire Kosovo Legal Framework



Kosovo Standardization Agency ISOharmonized Standards Management Information System

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Fundamental Cross-Cutting Concepts and Frameworks on Permissive System, Professional Regulation, and Inspections

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Pilot Government Human Resource and Process Improvement Analysis

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Foundational Spatial Planning Reform



Establishment of Concept and Framework for Real Property Legalization



Kosovo Chamber of Commerce International Trade Guide





Central Bank International Best Practice Updated Credit Registry

Increased Coordination and Consolidation of Economic Policy





Improved Credit Information Reporting



Construction Process Reform



World Bank Doing Business Improvement

Extensively Expanded Transparency and Public Engagement in National and Local Activities in Drafting, Policy Discussions, and Implementation



Continued Substantial Reforms for Doing Business 2014

Increased Tax and Fee Policy Differential Understanding and Implementation



Initiation of Cost-Recovery Regulatory Fee Establishment

Comprehensive Trade Policy Review Update



First Unified Construction Code of Kosovo

 

Today, due to successful USAID|BEEP activities, businesses, citizens, policy makers and regulators can access laws, regulations and other normative acts in an electronic, publicly accessible and searchable format in a centralized location; they are beginning to more openly engage in municipal discussions and administration activities across the country; they can more easily access credit USAID Business Enabling Environment Program Final Report July 2010 – July 2013

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reports through an electronic and secure online portal; businesses can import and export with significantly fewer documentary requirements; and the governance dialogue has seen an early shift toward a more market-oriented approach. With its recent independence and unique European demographic dynamic, Kosovo presented clear needs and opportunities for transformational reform. With USAID|BEEP assistance, the Government of Kosovo, led by the Deputy Prime Minister and Minister of Trade and Industry, set out its Economic Vision for 2014, which included ambitious but attainable goals. Among these goals was the achievement of a top-40 position in the World Bank’s Doing Business report; improved intergovernmental information technology coordination; reduced unemployment; significantly increased economic growth; reduced barriers to business; and increased government transparency. With USAID|BEEP assistance, Kosovo achieved impressive improvement in the World Bank Doing Business 2013 report, making significant progress towards achieving its 2014 goals. Kosovo’s performance showed a twenty-eight (28) place improvement in its overall ranking and an impressive one hundred and seventy (170) cumulative indicator rank improvement. USAID|BEEP-supported underlying variables of the Doing Business report showed an average improvement of 34.91% over the life of the Project. Additional Project-supported reforms are expected to be captured in future reports. To achieve these and other reforms, USAID|BEEP forged critical relationships with key public and private sector stakeholders for advocacy for and implementation of transformational business environment reforms consistent with this vision. From national counterparts such as the Office of the Prime Minister to municipal administrations, the Project reached out across the country to effect maximum impact. USAID|BEEP utilized eight (8) core Municipal Coordinators to provide tailored guidance across nearly all Kosovo municipalities, and later implemented a Municipal Partnership Program to expand its reach and transfer a proven reform methodology for sustainable knowledge transfer and capacity building. Based on Project recommendations, twenty-one (21) municipalities implemented reforms to improve transparency in their administrations, including updated municipal websites containing business enabling environment outreach material. These municipalities posted public documents to municipal websites and opened municipal meetings to the public for feedback and monitoring. Additionally, twenty-two (22) municipalities voluntarily eliminated or suspended a regulatory mechanism known as the “business license”. USAID|BEEP identified this business license as unnecessary and unrelated to proper regulation, creating a barrier to business entry and operation. To further improve local business environments, USAID|BEEP developed, implemented and promoted the Municipal Competitiveness Index. This effective reform tool is aimed to promote USAID Business Enabling Environment Program Final Report July 2010 – July 2013

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friendly competition among municipalities by measuring and making public business perceptions about their local business environments. Through analyses of Municipal Competitiveness Index results, Project Municipal Coordinators delivered tailored recommendations to municipalities. Implementation of these recommendations and publication of local reform results led to an average improvement in raw scores by over 21% across all municipalities and over 30% for USAID|BEEP’s eight (8) core municipalities, demonstrating realized impact for domestic businesses. As a fundamental tool for effecting good governance and promoting an increased understanding of the laws and obligations affecting citizens, businesses and government officials, USAID|BEEP supported the establishment of the first-ever in Kosovo electronic, searchable, publicly accessible, comprehensive and centralized legal information database (http://gzk.rks-gov.net). Rather than consulting the various governmental institutions individually and hoping that all normative acts have been identified, businesses and citizens can now consult a single location for all governing normative acts. Additionally, this legal information database provides policy makers with information vital to policy development and harmonization. Access to and knowledge of laws and regulations are critical to democratic governance and the rule of law. To establish this database of normative acts, USAID|BEEP assisted the Government of Kosovo to establish the first-ever regulatory baseline in Kosovo. The Project supported the Office of the Prime Minister and others to inventory all sub-normative acts and identify and eliminate any unnecessary or obsolete acts. Out of nearly one thousand and six hundred (1,600) acts, over four hundred and forty (440) were eliminated on this basis to establish Kosovo’s first-ever regulatory baseline. The Project supported the national government and municipal administrations to promote more market-friendly laws and sub-normative acts to improve the legal and operational framework. As a primary implementing partner of the Ministry of Environment and Spatial Planning, USAID|BEEP assisted the Ministry to begin undertaking transformational land use reforms in the area of construction and construction permitting, spatial planning and addressing unpermitted constructions. The Project supported the development and adoption of a new Law on Construction that, among other things, sets the stage for a more streamlined construction permitting process and establishes clearly-defined stages of construction inspection. USAID|BEEP also assisted the Ministry to develop the implementing sub-normative acts, including Kosovo’s first-ever construction code. This construction code establishes the minimum technical requirements for construction works to protect the public health and safety and provides a clear regulatory baseline for the issuance of construction permits. USAID|BEEP additionally assisted the Ministry and twenty-seven (27) municipalities to establish fees for construction permits utilizing cost recovery principles – a new concept for many local administrations.

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A notable part of the Project’s work was to facilitate much-improved public comment solicitation and incorporation on legal reforms. On the USAID|BEEP-supported draft Law on Spatial Planning, the Ministry of Environment and Spatial Planning received its most-ever public comments through comprehensive outreach activities. In this way, and through complementing public comment incorporation initiatives, recommendations of the business community are better reflected in business enabling environment reforms. In an effort to reduce barriers to trade, USAID|BEEP worked with Kosovo Customs to eliminate unnecessary certificates for import and export and to reduce the documentary requirements for international trade. Additionally, the Project spent significant resources to improve the capacities of the Trade Department within the Ministry of Trade and Industry and Kosovo Customs through relevant trainings and other knowledge transfer to, among other things, improve the skills and capacities of staff to understand and apply international trade governance best practice. Aimed to strengthen inter-ministerial policy development and coordination, the Project supported the establishment of the Trade Policy Working Group. With five (5) sector-specific subgroups, the Trade Policy Working Group proved as a valuable platform for coordinating trade policy and receiving and addressing private sector input to the policy making process. With import and export processes more streamlined, USAID|BEEP assisted the Kosovo Chamber of Commerce to capture all requirements for import and export to establish Kosovo’s International Trade Guide. This guide additionally contains trade-relevant legislation, important institutions and associations, and a trade and customs lexicon of commonly-used trade terminology. The Project successfully transitioned the International Trade Guide to the Kosovo Chamber of Commerce. To more closely integrate Kosovo into the international marketplace, increase private sector access to international standards and domestic technical norms, and improve inter-governmental standards sharing, USAID|BEEP supported the Kosovo Standardization Agency and the Ministry of Public Administration to develop and install an internationally-harmonized Standards Management Information System (http://aks.rks-gov.net). This new system provides a simple platform for business and citizens to access standards and contribute to their development, promoting improved transparency and inclusiveness. Complementing broader improvements in the World Bank’s Doing Business reports, these trade improvements contributed to a performance improvement in the “Trading Across Borders” indicator for Kosovo. Reflected in this improvement were both reductions in the time and costs for import and export transactions. Project-supported trade reforms are expected to yield additional improvements in future Doing Business reports.

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Identifying the need to improve the amount of credit information available to financial and other risk-assessing institutions and increase the reliability of that data, USAID|BEEP supported the Central Bank of Kosovo to upgrade the Credit Registry’s software system. In combination with a Projectsupported Regulation on the Credit Registry, the new software expands the amount of credit information that can be collected, while at the same time improving the security of that information. The Regulation also allows a previously-excluded credit information provider, insurance companies, access to the credit information system, further expanding the amount of credit information available. Reflecting the Central Bank’s full support for credit reporting reforms and complementing the launch of the Credit Registry’s new software, USAID|BEEP established Kosovo’s first online credit portal where businesses and citizens can access their own credit reports. In the past, credit reports had to be obtained at the country’s capital in Pristina, often requiring a deterring amount of time and effort. With these improvements, USAID|BEEP has supported a more than 150% increase in the amount of annual credit report requests in the Project's final year. USAID|BEEP, over its project lifetime, provided comment or contributed to discussion on 27 laws, including 8 related directly to Doing Business, referencing over 40 laws; through launch of the Legal Information Database increased access to more than 512 laws, 1,249 administrative instructions and 912 other sub-legal acts (e.g. decisions, orders, etc.); incorporated more than 200 industrial standards (included/referenced in the Construction Code); worked across 37 municipalities, 7 ministries, the Office of the Prime Minister (at least 3 departments), the Central Bank of Kosovo and Customs; and worked with 22 national-level departments, 275 municipal departments, 550+ municipal regulations, 6 Parliamentary committees, and 22 Parliamentarians. While not directly attributable to specific project activities as detailed in the PBMP, according to the International Monetary Fund Kosovo continued to experience positive (and higher than the Central and Eastern Europe average) economic growth in an environment that saw other countries of Europe drop into recession due to continuing economic challenges. Additionally in Kosovo, from 2010 – 2013 the value of loans increased 29.9% and the interest rate spread (between rate charged on loans and rates paid on deposits) saw a reduction from 11.1% to 9.2%. Key Achievements of the Project include: 

Established the first-ever centralized, electronic, searchable and publicly-accessible database for all normative acts in Kosovo;



Eliminated over 440 unnecessary and obsolete sub-normative acts to establish the first-ever regulatory baseline in Kosovo;

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

Assisted improvement in Doing Business, including a twenty-eight (28) place country rank improvement and a one hundred and seventy (170) cumulative rank improvement;



Assisted the Government of Kosovo to set out its ambitious Economic Vision for 2014;



Improved Project-supported underlying variables of the Doing Business report by more than 34% for Kosovo;



Achieved more than $195 million in annualized economic impacts of reform;



Contributed to the change in policy dialogue toward stronger market-oriented governance;



Assisted municipalities to put fees on a cost recovery-basis, including through construction permit and social impact regulatory charges;



Assisted twenty-one (21) municipalities to improve transparency through publication of public documents on municipal websites and by beginning, the first-ever in many cases, public meetings on municipal budgeting and spending and other municipal activities;



Supported twenty-two (22) municipalities to voluntarily eliminate or suspend the business license to make it easier for businesses to start and operate a business;



Contributed to the development of draft framework laws aimed to establish clear procedures for any government permission or inspection, reducing government discretion and focusing regulation on only the protection of public health and safety;



Established an internationally-harmonized Standards Management Information System at the Kosovo Standardization Agency to increase private sector access to standards and improve inter-governmental standards sharing;



Assisted adoption of the first-ever construction code in Kosovo to clearly establish the minimum technical requirements for construction works;



Developed, launched, leveraged, and institutionalized the Municipal Competitiveness Index in Kosovo; a unique reform tool utilizing tailored surveys to measure business perceptions of local business environments;



Improved Municipal Competitiveness Index raw scores across the country by more than 20%;



Reduced the number of documentary requirements for import and export, greatly reducing the informational and administrative burdens of trading across borders;



Assisted establishment of a cross-cutting Trade Policy Working Group that facilitates country-wide policy discussion of trade and trade-related issues;



Built the capacities of the Ministry of Trade and Industry trade department to better carry out their duties under an improved legal framework for trade;



Upgraded the Credit Registry of Kosovo software to improve data reliability through increased data availability and accuracy;

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

Supported the Central Bank of Kosovo to achieve a more than 150% increase in the number of annual credit report requests by businesses and citizens in the Project’s final year; and



Supported an increase to 5 in the number of types of users of the credit information system

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CONSOLIDATED LESSONS LEARNED AND RECOMMENDATIONS The business environment has seen considerable improvements over the course of the last three years. Legal and other public information has been made more readily accessible; use of the regulatory system has been put on a more rational footing; increased and more predictable credit information has been made available; importing and exporting has been improved; and steps have been taken to make more frequent public comment and participation processes in governance. However, more remains to be done. Below are the key lessons learned recommendations of the Business Enabling Environment Program to improve the national and local business environments in Kosovo based on the Project’s experience, activities and observations. LAND RIGHTS



Increase certainty in property ownership, including by resolving conflicting claims of ownership



Implement the Project-supported program for the treatment of constructions without permit

OPERATIONAL EFFICIENCIES



Streamline government activities so that they are carried out as efficiently as possible, minimizing unnecessary interactions.



Encourage resource sharing between municipalities to effect economies of scale



Promote implementation of government efficiency metrics focused on process reforms



Support harmonized statistical gathering to inform policy-making



Harmonize a unified Information Systems/Information Technology (IS/IT)

GOVERNANCE



Take every opportunity to echo the principles of a free-market system to continue the shift in policy dialogue toward market-oriented governance



Distinguish risk from uncertainty in the reform approach, addressing the root causes of issues that constrain the free economic activity of citizens

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

Establish and maintain legislative support services to improve harmonization across legal acts, support public outreach and participation, and provide specialized expertise across technical areas



Implement a unified and justified permissive system, bringing into conformity all permissions with international best practice and the upcoming Law on the Permissive System



Eliminate over-burdensome and arbitrary inspections



Improve legal drafting and translation



Recognize the unique demographic character of the population to shape national policy

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Enhance parliament monitoring of development and implementation of sub-normative acts following adoption of laws



Continue to improve government transparency



Expand the membership of the National Council of Economic Development



Support adherence to the separation of powers between the executive, legislative and judicial branches



Expand use of the MCI as a tool to improve the local business environment and governance



Improve the national quality infrastructure



Continue to improve the capacities of non-governmental organizations, business associations, and other “soft infrastructure” organizations to empower the private sector to monitor government activity

RULE OF LAW



Strengthen the ability of the courts to challenge legal and administrative decisions



Introduce legal doctrines, such as piercing the corporate veil, to improve functioning of the judiciary and promote individual accountability that minimize the need for intrusive and burdensome regulatory oversight



Establish a hierarchy of laws



Continue to harmonize future normative acts with the legal information database



Support expansion of and inclusion in judicial database

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FISCAL POLICY



Put fees on a cost recovery-basis



Narrow government activities to only those objectively justified on a public health and safety basis



Clearly distinguish taxes and fees

TRADE AND INTERNATIONAL INTEGRATION



Carefully review and consider progress through EU accession, focusing at all times on what is best for the country



Eliminate arbitrary Kosovo Customs inspections procedures



Reduce physical inspections of imports



Increase the number of free trade partners and agreements



Continue to improve the technical trade capacities within Kosovo



Continue supporting accession to the World Trade Organization (WTO)



Continue to improve the legal and regulatory external trade framework

FINANCE 

Improve enforcement and execution of contracts



Continue to expand the availability of credit information

DOING BUSINESS 

Business reforms are generally implemented in 3-5 year cycles and, following USAID|BEEP activities, additional Doing Business improvement possibilities should be explored



Monitoring and implementation should be undertaken to ensure the construction reform momentum continues



The construction code is an ever-evolving document that is based on current industry construction norms, and should continually be reviewed and revised as practice evolves

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BEEP RESULTS FRAMEWORK The United States Agency for International Development (USAID) / Kosovo Strategic Plan for 20102014 sets out an ambitious five-year agenda for Kosovo. The United States Government (USG) seeks a strong and effective partnership with the Government of Kosovo (GoK) that builds on their close relationship in order to address regional and global challenges. USG support focuses on 

Building the institutions of Kosovo’s government and society;



Encouraging a democratic process inclusive of all citizens, including all minority groups;



Promoting economic development such that all people of Kosovo enjoy the benefits of prosperity;



Ensuring that society and government are firmly grounded in the rule of law; and



Supporting the continued integration of Kosovo in the region and Europe.

The 2010-2014 USAID / Kosovo strategic plan is based on the implementation of three assistance objectives (AOs): 

Assistance Objective 1: Youth Are More Productive and Engaged Members of a Stable Kosovo



Assistance Objective 2: Increasing Private Sector-Led Economic Growth



Assistance Objective 3: Empowering Kosovo’s Citizens to Consolidate a Functioning Democracy

USAID|BEEP’s Project Objective of “Improving the Enabling Environment for Business Growth” drove the establishment of project activities that are narrowly tailored to support achievements under Assistance Objective 2: Increasing Private Sector-Led Economic Growth; and Assistance Objective 3: Empowering Kosovo’s Citizens to Consolidate a Functioning Democracy. Each of USAID|BEEP’s three primary Components encompass these dynamic activities and are reflected within the Results Frameworks below.

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ASSISTANCE OBJECTIVE 2 Mission Mission Goal Goal Kosovo Kosovo as as an an effective effective state, state, with with aa viable viable economy economy and and an an inclusive inclusive democracy democracy on on the the path path to to European European integration integration USAID Assistance Objective 2: Increasing Private Sector-Led Economic Growth

USAID Intermediate Result 2.1 Private Sector Growth and Investment Increased

USAID Intermediate Result 2.3 Economic Institutions Ensure Fiscal Sustainability

BEEP Project Objective Enabling Environment for Business Growth Improved

USAID Sub-Intermediate Result 2.1.1 Improved Enabling Environment for Business Growth

BEEP Intermediate Result 1 Rules and Regulations Improved

USAID Sub-Intermediate Result 2.1.3 Increased Affordable and Accessible Credit

BEEP Intermediate Result 2 Barriers to Trade Reduced

USAID Sub-Intermediate Result 2.3.1 GoK Institutions Design and Implement Economic and Fiscal Policies in Accordance with International Best Practices

BEEP Intermediate Result 3 Risks of Lending in the Financial Sector Reduced

KRA 1.1 Municipal Business Environment Improved

KRA 2.1 Legal Framework for Import and Export Transactions Improved

KRA 3.1 Doing Business Getting Credit Indicator Improved

KRA 1.2 National Business Environment Improved (Doing Business)

KRA 2.2 Streamlined Import and Export Processes Supported

KRA 3.2 Public Credit Registry Strengthened

KRA 1.3 National Business Environment Improved (Non-Doing Business)

KRA 2.3 Capacity Building to Institutionalize Trade Best Practice Supported

KRA 3.3 Legal, Regulatory, and Informational Reform Supported

KRA 1.4 Public Access to and Knowledge of Law and Legal Reforms Improved

KRA 2.4 Development of International Trade Guide and Integrated Tariff Promoted

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ASSISTANCE OBJECTIVE 3 Mission Mission Goal Goal Kosovo Kosovo as as an an effective effective state, state, with with aa viable viable economy economy and and an an inclusive inclusive democracy democracy on on the the path path to to European European integration integration USAID Assistance Objective 3: Empowering Kosovo’s Citizens to Consolidate a Functioning Democracy

USAID Intermediate Result 3.1 More Accountable and Effective Governance at the National and Municipal Levels

BEEP Project Objective Enabling Environment for Business Growth Improved

USAID Sub-Intermediate Result 3.1.1 Increased Capacity of Local Governments to Advocate Their Interests, Manage Resources, and Provide Services

BEEP Intermediate Result 1 Rules and Regulations Improved

USAID Sub-Intermediate Result 3.1.3 National and Municipal Assemblies More Open to Citizen Input

BEEP Intermediate Result 2 Barriers to Trade Reduced

BEEP Intermediate Result 3 Risks of Lending in the Financial Sector Reduced

KRA 1.1 Municipal Business Environment Improved

KRA 2.1 Legal Framework for Import and Export Transactions Improved

KRA 3.1 Doing Business Getting Credit Indicator Improved

KRA 1.2 National Business Environment Improved (Doing Business)

KRA 2.2 Streamlined Import and Export Processes Supported

KRA 3.2 Public Credit Registry Strengthened

KRA 1.3 National Business Environment Improved (Non-Doing Business)

KRA 2.3 Capacity Building to Institutionalize Trade Best Practice Supported

KRA 3.3 Legal, Regulatory, and Informational Reform Supported

KRA 1.4 Public Access to and Knowledge of Law and Legal Reforms Improved

KRA 2.4 Development of International Trade Guide and Integrated Tariff Promoted

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PERFORMANCE AGAINST PBMP PROJECT RESULTS SUMMARY

Project Result 1: Percentage Improvement in Underlying Variables of Project-Supported Doing Business Indicators Project Result 2: The Economic Impact of Reforms Non-Trade Reforms Trade-Related Reforms Project Result 3: Percentage Improvement in Municipal Competitiveness Index scores in at least eight municipalities Project Result 4: Number of types of users of the Credit Information System Project Result 5: Number of requests by businesses and citizens for their own credit reports

2010 – 2013

End of Project PR Target

Percent of Target Achieved

34.91%

20% average total improvement in the combined underlying variables of indicators reflecting project activities in the annual WBDB Report

174.5%

$195.1 mm

$170 mm

114.7%

$136.4 mm $58.7 mm

$135 mm $35 mm 20% improvement in MCI scores in eight core municipalities as reflected in the MCI 2013

29.6%

148%

5

5

100%

1,009

960

105%

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PROJECT ACTIVITY SUMMARY COMPONENT ONE: IMPROVED RULES AND REGULATIONS Component One: Improved Rules and Regulations. Component One is the largest component in terms of resource allocation and technical scope, and works at both the national and municipal levels to remove barriers to business by simplifying and streamlining the regulatory framework — statutes, regulations, rules, procedures, and other legal requirements — that is applied to businesses operating in Kosovo. The current practice of regulatory bodies is generally to impose unjustified requirements on private economic activity, and this constitutes a serious, system-wide constraint on business. Component One has been working closely with the GoK – primarily with the Office of the Prime Minister (OPM), The Ministry of Environment and Spatial Planning (MESP), and the Ministry of Trade and Industry (MTI) – to carry out legal reforms that address impediments to business identified in the World Bank Doing Business reports on Kosovo. Additionally, it supports reforms in areas that complement DB reform, including permissive system improvement; consolidation and publication of laws and regulations through a unified database; inspections reform; and other initiatives detailed below. Municipal Coordinators in USAID|BEEP’s eight primary municipalities – Ferizaj, Gjakova, Gracanica, Mitrovica, Peja, Pristina, Prizren, and Strpce – have established strong links with local business communities and municipal administrations to identify the specific legal constraints that impede business activities and to engage them in the reform process. C1-1: SUPPORT MUNICIPAL REFORMS THROUGH USAID|BEEP AND PARTNERSHIP PROGRAM MUNICIPAL COORDINATORS USING THE MUNICIPAL COMPETITIVENESS INDEX (MCI) AND PURSUE OPPORTUNITIES TO INSTITUTIONALIZE THE MCI Municipal Competitiveness Index 2013. The business environment in Kosovo is impacted not only by national-level policies, laws and regulations, but is influenced as well by municipal administrations. Within the realm of municipal competencies, local level governments have the opportunity to make the operating environment friendlier to businesses. In addition to providing direct support to Kosovo municipalities for improved rules, regulations and operations,

USAID|BEEP

developed,

implemented

and

widely

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

publicized

the

Municipal

15

Competitiveness Index (MCI). This unique reform tool utilizes factors internationally-recognized as important to a strong business environment and measures businesses’ perceptions across these factors through eight (8) tailored sub-indices. Because the MCI captures business perceptions, policy makers are better able to identify and implement reforms that truly impact the operations of business. In an effort to institutionalize the MCI and build local capacities to carry out the MCI beyond the lifetime of the Project, USAID|BEEP

MCI Sub-indices    

partnered with a local institution to survey over two thousand (2,000) businesses across the country for the first-ever MCI in Kosovo (MCI 2011). Covering thirty-three (33) municipalities, the MCI 2011 established the baseline for cross-municipality comparison and the identification of tailored reform initiatives. Utilizing

the

MCI

2011

results,

the

Project’s

   

Barriers to Business Entry Transparency Participation and Predictability Time Costs of Regulatory Compliance Taxes and Fees Municipal Administration Labor and Business Support Services Municipal Infrastructure

Municipal

Coordinators (MCs) carried out intensive municipal diagnostic analyses to identify reform recommendations effectively

aimed

impact

each

to

most

measured

municipality. The diagnostic analyses revealed that, among other things, transparency and the administration of taxes and fees were among the most pressing

business

environment

concerns in the municipalities. Wielding this information, Project MCs conducted

tailored

municipal

diagnostic presentations across the country

that

provided

local

Municipal Competitiveness Index diagnostic presentation in Ferizaj

administrations with powerful reform recommendations to improve their business environments. Recommendations included the inclusion of municipal regulations and other public information on local websites and the establishment of fee structures based on cost recovery principles. Over the life of the Project, the MCI diagnostic analyses and presentations proved to be critical in successfully improving local environments.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

16

“After publishing the first MCI and making presentations of results and recommendations to our municipality, we began implementing the recommendations in close cooperation with local businesses and USAID BEEP with the aim of improving the business environment.” – Shaip Surdulli, Mayor, Kamenica Municipality

Embracing Project recommendations, twenty-one (21) municipalities improved transparency by making municipal documents public and posting information to their local websites. Discussed in C1-2 below, municipalities also implemented elimination of the work permit. Identified by the World Bank as an unnecessary burden on business, this de facto annual tax on businesses consumed crucial business capital. In mid-2012, USAID|BEEP again surveyed businesses in

preparation for the MCI 2012; this time surveying more than three thousand (3,000) businesses across the country and covering all thirty-seven (37) municipalities. Following implementation of Project recommendations across sub-indices, 91% of businesses reported an improved local business environment. Across the country municipal scores in “From the frequent meetings we had with the representatives of the project…we fully agreed that the private sector is the only opportunity for the development of the municipality and employment of its citizens. So, with the help of USAID/BEEP we have started to identify and eliminate barriers and constraints in order to create a more suitable environment for the business community. Relying on the support and recommendations of USAID/BEEP we have taken concrete steps for improvement of the business environment. We are confident that the Business Enabling Environment Program, USAID/BEEP, is unlike other projects, and has set the stage for sustainable social and economic development for the future.” Islam Jashari, Director of Finance and Budget, Viti

the MCI 2012 improved on average 14.04% over the previous year’s report, and USAID|BEEP’s eight (8) primary municipalities saw an average improvement of 19.34%. Building

on

the

realized

reform

momentum,

USAID|BEEP continued to advocate for local business environment improvement. A commonly-identified issue across municipalities (as well as at the national level) was use the regulatory system as means for collecting revenue. This was largely accomplished by charging more for services than the cost of their administration, acting as a de facto tax; diverting efforts away from the proper role of the regulatory system to protect public health and safety; and blurring the line between taxes and fees. A common instrument for this type of regulatory revenue-raising is the business license1.

Although within the municipalities’ legal competence, USAID|BEEP recommended that local administrations voluntarily cease issuance of the business license to reduce burdens on business. Coupled with wider fiscal reform, including through improved enforcement of property tax, municipal regulation could be put on a more rational footing. 1

The business license is within municipal competence under Law No. 03/L-049 on Local Government Finance.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

17

Embracing this recommendation and recognizing the need for change, to date twenty-two (22) municipalities have voluntarily eliminated or suspended the business license fee. This important step represents a continued fundamental shift toward market-oriented governance in Kosovo and contributes to improved business perceptions of local administrations. USAID|BEEP, as part of the USAID Forward initiative, transitioned the MCI 2013 surveying and analysis to a local counterpart. Capturing municipal reforms and improvement across the country, MCI 2013 results

Project Result 3: 20% MCI Improvement in 8 Municipalities USAID|BEEP’s 8 core municipalities showed an average improvement of 30.48% in the MCI 2013 report as compared to the MCI 2011 baseline

were released in June 2013. Again surveying more than three thousand (3,000) businesses, municipal scores across the country showed on average more than a 21% improvement over the MCI 2011 results, while scores in USAID|BEEP’s 8 core municipalities reflected a more than 29% improvement. The transition of the MCI surveying and analysis to the local counterpart through the USAID Forward initiative represents a tremendous opportunity to sustain this important reform tool for continued local business environment improvement. C1-2: SUPPORT NATIONAL BUSINESS ENVIRONMENT IMPROVEMENT (DOING BUSINESS) Doing Business reform. The World Bank Doing Business report provides an internationally-recognized platform for supply-driven business environment reform. Host country comparison with international performance can prove as a useful catalyst for domestic improvement. In Kosovo, USAID|BEEP helped bring national attention to Doing Business as a reform tool and facilitated a much-improved understanding of the Doing Business methodology and process. The Project additionally utilized this supply-driven reform tool to Project Result 1: 20% Improvement in Project-supported Variables of Doing Business Indicators

catalyze broader and deeper demand-driven reform

Project-supported underlying variables of the Doing Business report saw an average improvement of 34.91%

USAID projects, notably USAID|BEEP, provided

initiatives throughout the country.

assistance to Kosovo to encourage and support legal reforms

that

are

now

being

recognized

internationally. Over the course of USAID|BEEP’s support in Kosovo, the government has adopted a number of reforms to capitalize on their Economic Vision 2014 commitment that impact Doing Business, including, among others, new Laws

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

18

on Cadastre2, Fire Protection3, Accounting, Financial

Reporting

and

Audit4

and

Construction5, and amendments to the Laws on the Establishment of the Register of the Immovable Property Rights6 and on Notary7. With assistance from the Project, proper implementation of these reforms is now being reflected by the World Bank. The World Bank 2013 report released in

“I believe that [for Doing Business 2013] we showed that commitment brings results. I hope we can surpass our own success this year. Be sure that we are well aware that a large portion of this success is due to the work done by the USAID|BEEP team, and for that we are eternally grateful.” - Bernard Nikaj, Senior Adviser to the Deputy Prime Minister and Ministry of Trade and Industry

October 2012 reflected a 28-place country ranking improvement for Kosovo. Again, leading all 185 economies studied with a 170 cumulative indicator ranking improvement, Kosovo showed notable improvements in the indicators for “Starting a Business”, “Dealing with Construction Permits”, “Protecting Investors” and “Trading Across Borders.”8 Table X. DB 2013 Highlighted Kosovo Indicator Improvements

Doing Business Indicator

DB 2013 Rank Improvement

Contributing Reforms

Starting a Business

+44

Elimination of charter capital for Limited Liability Companies and the streamlining of business registration processes

Dealing with Construction Permits

+33

Reduction in costs by over 500% per capita GNI and an overall reduction by almost 50% in the time required to register a building

Protecting Investors

+76

Strengthened protections for minority shareholders

Trading Across Borders

+9

20% reduction in the cost of trade processes

With these improvements in the Doing Business 2013 report, USAID|BEEP’s Project Result 1 (PR1) target of 20% average improvement in the underlying variables of Project-supported indicators has been exceeded, showing an average improvement of 34.91%. Although the results show significant improvements, it must be noted that USAID|BEEP expects additional Project-supported improvements to be reflected in the Doing Business 2014 report, including a number of trade, property, and construction-related reforms not captured owing to the timing of World Bank surveying. The table below shows the specific PR1 results.

2

Law No. 04/L-013 on Cadastre, abolishing Law No. 2003/25 on Cadastre. Law No. 04/L-012 on Fire Protection, abolishing Law No. 02/L-41 on Fire Protection. 4 Law No. 04/L-014 on Accounting, Financial Reporting and Audit. 5 Law No. 04/L-110 on Construction. 6 Law No. 04/L-009 on Amending and Supplementing the Law No. 2002/5 on the Establishment of the Immovable Property Rights Register. 7 Law No. 04/L-002 on Amending and Supplementing the Law No. 03/L-010 on Notary. 8 See Annex 3 for more detailed information on Doing Business improvements. 3

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

19

Table X. PR-1 Results Indicator

DB 2011

DB 2012

DB 2013

Change

PR-1. Doing Business Improvement 20% Improvement in Underlying Variables of Indicators Supported by BEEP Starting a Business Procedures (number) 10 Time (days) 58 Cost (% income per 28.7 capita GNI) Paid-in minimum capital (% income per capita 112.4 GNI) Total Indicator Change (average %) Dealing with Construction Permits Procedures (number) 16 Time (days) 301 Cost (% income per 3,758.40 capita GNI) Total Indicator Change (average %) Getting Electricity Procedures (number) 7 Time (days) 60 Cost (% income per 1,036.00 capita GNI) Total Indicator Change (average %) Registering Property Procedures (number) 8 Time (days) 33 Cost (% of property 0.6 value) Total Indicator Change (average %) Getting Credit Strength of Legal Rights 8 Index (0-10) Depth of Credit 5 Information Index (0-6) Public Registry Coverage 16.9 (% of adults) Private Bureau Coverage 0 (% of adults) Total Indicator Change (average %) Protecting Investors Extent of Disclosure 3 Index (0-10) Extent of Director 2 Liability Index (0-10) Ease of Shareholder Suits 3 Index (0-10) Strength of Investor 2.7 Protection Index (0-10) Total Indicator Change (average %)

10 58

9 52

10.00% 10.34%

26.7

23

19.86%

104.6

0

100.00% 35.05%

16 301

16 156

0.00% 48.17%

3,496.50

2,986.00

20.55% 22.91%

7 60

7 48

0.00% 20.00%

1,1016.80

915.4

11.64% 10.55%

8 33

8 33

0.00% 0.00%

0.6

0.6

0.00%

For Project Result 1, a target of 20% improvement across underlying variables of USAID|BEEP-supported indicators was set. USAID|BEEP tracked these data as reported by the World Bank annually, but did not set forwardlooking annual targets for individual processes. The table shows the percentage change: for each process within every indicator; in total for each indicator; across all indictors; and across all underlying variables of USAID|BEEP-supported indicators.

0.00%

8

8

0.00%

5

5

0.00%

20.5

22.2

31.36%

0

0

0.00% 10.45%

3

6

100.00%

2

6

200.00%

3

3

0.00%

2.7

5

85.19% 96.30%

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

20

Paying Taxes Payments (number per year) Time (hours per year) Total tax rate (% of profit) Total Indicator Change (average %) Trading Across Borders Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container) Total Indicator Change (average %) Enforcing Contracts Time (days) Cost (% of claim) Procedures (number) Total Indicator Change (average %) Resolving Insolvency Time (years) Cost (% of estate) Recovery rate (cents on the dollar) Total indicator change (average %)

33

33

33

0.00%

163

164

164

-0.61%

16.5

15.4

15.4

6.67% 2.22%

8

8

8

0.00%

17

17

15

11.76%

2,230

2,270

1,775

20.40%

8

8

8

0.00%

16

16

15

6.25%

2,280

2,280

1,810

20.61% 9.84%

420 33 53

420 33 53

420 33 53

0.00% 0.00% 0.00% 0.00%

2.0 15

2.0 15

2.0 15

0.00% 0.00%

34.6

34.4

34.7

-0.29%

Average change across all Doing Business indicators Average change across BEEP-supported Doing Business indicators

-0.10%

18.72%

34.91%

USAID|BEEP-supported Doing Business indicators include (1) Starting a Business; (2) Dealing with Construction Permits; (3) Getting Credit; (4) Protecting Investors; and (5) Trading Across Borders.

Below are some key Project-specific reforms that contributed to this tremendous Doing Business improvement. STARTING A BUSINESS

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

21



Elimination of the charter capital requirement for LLCs. Under the USAID|BEEPsupported amendment to the Law on Business Organizations9 adopted in 2011, the requirement for Limited Liability Companies (LLCs) to deposit €1,000 in minimum charter capital was eliminated. Although opening a bank account is still required for tax purposes and remains as a captured step in the Doing Business 2013 report, elimination of the minimum charter capital requirement represents a cost reduction of 104.6% of the Gross National Income (GNI) per capita within “Starting a Business”.



Reduction in time to obtain a business certificate. In Step #2 of “Starting a Business” for Kosovo, the Doing Business 2013 report reflects a 5-day reduction in the time it takes to obtain a business certificate. Again under the amendment to the Law on Business Organizations10, USAID|BEEP recommended a statutory time limit for the issuance of the business certificate (3 days from the date of application). With implementation, Kosovo’s performance in this indicator reflected a 5-day savings for this step.



Elimination of the business registration fee. Through the Project-supported amendment to the Law on Business Organizations11, the business registration fee was eliminated. The Doing Business 2013 report captured this reform, eliminating 1 step and reducing costs for business startup by €23.5.

Although there are a number of factors impacting business registrations, it should be noted that, as shown in the tables below, registrations in Kosovo have seen significant increases over preUSAID|BEEP trends. While these measures cannot be directly attributed to Project interventions, the totality of business environment improvement suggests truly realized impacts that incentivize registration.

9

Law No. 04/L-006 on Amending and Supplementing Law No. 02/L-123 on Business Organizations. Idem. 11 Idem. 10

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

22

DEALING WITH CONSTRUCTION PERMITS 

Reduction in the time to obtain fire protection consent. The Doing Business 2013 report captures a 5-day savings in this step as a result of a new USAID|BEEP-supported Law

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

23

on Fire Protection12. Under this Law, fire consent is now limited to “special cases” as determined by a sub-normative act from MESP, greatly limiting its application. 

Reduction in building registration time post-construction. With time limits on building registration incorporated in the USAID|BEEP-supported Law on the Cadastre13, the Doing Business 2013 report captured a 131-day savings. Previously reported as taking 165 days to register a building post-construction, new data reflects only 34 days.



Reduction in building registration costs post-construction. Representing a significant cost savings within the “Dealing with Construction Permits” indicator, the Doing Business 2013 report captured a €4,293 cost savings for building registration post-construction. USAID|BEEP advocated for registration costs to be put on a cost recovery-basis through recommendations on the Law on Cadastre14. The Kosovo Parliament incorporated these recommendations when they adopted the new Law in 2011. The Project worked with MESP to develop an implementing AI15 that, among other things, greatly reduced the costs to register buildings post-construction based on cost recovery principles.

PROTECTING INVESTORS Kosovo showed impressive ranking improvement within the “Protecting Investors” indicator (+76 ranks, from 176 in DB 2012 to 100 in DB 2013). As a measure of the protections for minority shareholders, especially dealing with corporate officer conflict of interest transactions, this indicator was improved greatly through a Project-supported amendment to the Law on Business Organizations16. Specific improvements within three (3) sub-indices of the “Protecting Investors” indicator are described below. 

Extent of disclosure index. Kosovo’s score for this index improved by one point with the adoption of the requirement that a shareholders' meeting must be held to approve a transaction involving the conflict of interest of a corporate official, at which meeting the corporate official may not vote. Also, a 2-point improvement was realized by requiring disclosure of the transaction and the corporate official’s conflict of interest.



Extent of director liability index. Kosovo’s score for this index improved by one point with the adoption of the provision that shareholders can hold the relevant corporate official liable for damage caused by a transaction involving a conflict of interest. Further, a court can

12

Law No. 04/L-012 on Fire Protection (abolishing Law No. 02/L-41 on Fire Protection). Law No. 04/L-013 on Cadastre (abolishing Law No. 2003/25 on Cadastre). 14 Idem. 15 Ministry of Environment and Spatial Planning Administrative Instruction No. 05/2012 on Fees and Charges of Cadastral Services and Products Rendered by Municipal Cadastral Offices and Licensed Surveying Companies. 16 Law No. 04/L-006 on Amending and Supplementing Law No. 02/L-123 on Business Organizations. 13

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

24

now void the transaction upon a successful claim by a shareholder plaintiff, generating an additional one point improvement. Because the corporate official is required to pay damages caused by the conflict of interest upon a successful claim by the shareholder, Doing Business awarded Kosovo a third additional point. Finally, the corporate official is now required to pay profits for damages caused by the transaction upon a successful claim by the shareholder(s), representing a fourth1-point improvement. 

Strength of investor protection index. As a simple average of the other three subindices, this index improved from 2.7 to 5.0 as a result of the Project-supported reforms.

As a mechanism to incentivize future initiatives and leverage the current reform momentum, USAID|BEEP completed a Doing Business reform media campaign in December 2012 that was wellreceived by Kosovo audiences. As the focus of the outreach, the campaign highlighted a number of successes, business Media clip from the Doing Business 2013 public outreach campaign to promote Kosovo’s world-leading improvement

costs

and

including

streamlined

registration, time

for

reduced building

registration post-construction, and

improved minority shareholder protections. C1-3: SUPPORT NATIONAL BUSINESS ENVIRONMENT IMPROVEMENT (NONDOING BUSINESS) Land use reform. Predictability and security in land use represents a fundamental pillar of

market-oriented

governance.

From

easy-to-navigate construction permitting to simplified land and building registration, rights in private property are critical to business operations and wealth creation. For these reasons, land use reform has been a primary focus of USAID|BEEP’s Component One.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

25

USAID|BEEP’s support was aimed to improve the three pillars of land use: construction, spatial planning and the treatment of unpermitted constructions. Already a strong supporter of reform initiatives with the Ministry, MESP requested in 2011 that USAID|BEEP take a leading role in implementing transformational land use reform. Construction reform. Beginning with construction, USAID|BEEP assisted MESP to develop a new Law on Construction that aimed to streamline the construction permitting and inspections processes. Salient features of the draft Law included:  Silence is consent principle. This establishes a time limit for authorized permitting bodies to issue construction permits. If the body does not issue the permit within the time limit and does not provide sufficient reason, then the permit is legally deemed issued and the applicant may proceed with construction according to the terms submitted in the application. This reduces discretion on the part of the permitting bodies, eroding possibilities for and reliance upon corruption.  Cost recovery-based permitting fee. It is very common for municipalities to use permits and licenses as a revenue-raising mechanism rather than for its intended purpose of protecting the public’s health and safety. The Law incorporates a requirement that authorized bodies to publicize their permit fee and that the fee be based on only the costs of issuing the permit. Any amount over the costs of issuance is a de facto tax.  Transparent and predictable procedures for issuing construction permits. The Law establishes clear and predictable procedures for applying for and obtaining a construction permit. This includes the process all the way from the application to final inspection and issuance of the occupancy certificate.  Risk-based approach. Not all constructions are the same. Employing international best practice, the permitting approach taken in the Law incorporates a risk-based assessment of the construction activities so the authorized permitting bodies can more effectively allocate resources. Time limits for the purpose of “silence is consent” are extended for the purposes of riskier construction activities.  Requirement for development of a Construction Code. Work does not end with adoption of the DLC. The Law requires the development of a tailored Construction Code. The Construction Code establishes the minimum mandatory technical requirements for construction activities in Kosovo. In early March 2012, the GoK approved the draft Law on Construction in the Government Meeting and submitted it to the Parliamentary Commission on Agriculture, Spatial Planning, Environment, USAID Business Enabling Environment Program Final Report July 2010 – July 2013

26

Forestry, and Rural Review for review. USAID|BEEP helped to facilitate public comment during the Commission’s first reading where discussion proved intense. The Project also assisted the Commission in responding to concerns surrounding the draft Law, including the implementation concerns voiced by the municipalities. On May 31, 2012 Parliament passed the draft Law in the second reading and sent it to the President for signature. On June 22, 2012 the President then signed the Law17 into force.

On the front page of the Kosova Sot newspaper, the headline reads “The New Law on Construction will Lower Costs and Corruption”

17

Law No. 04/L-110 on Construction.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

27

An important part of the new Law was the requirement for MESP and the municipalities to establish cost recovery-based fees for construction permits. To

facilitate

this

providing

guidance

creating

consistency

process, to

and across

competent bodies, USAID|BEEP assisted MESP to develop an Administrative Instruction (AI) on

Construction

Administrative

Fees

Permit Construction Permit Fee Workshop with MESP and municipalities in Pristina and

Infrastructure Regulatory Charges18 that established a clear calculus for developing such a fee. In addition, and included in this AI, USAID|BEEP developed draft contracts and guidance for use by municipalities when negotiating infrastructure development agreements. These development agreements will help municipalities and citizens better define responsibilities for providing infrastructure crucial to individual projects as well as the country’s overall business environment. To help MESP and municipalities understand and apply the cost recovery equation, USAID|BEEP trained staff (training the trainers) from MESP on the calculation of these fees so that the Ministry could then better assist municipalities in their fee calculations. With USAID|BEEP-encouragement and support, MESP then held five (5) regional training workshops with municipalities (those in Peja, Prizren, Pristina, Gjilan, and Mitrovica) and one (1) with construction businesses on the new AI. These trainings were very well received, with over one hundred and seventy (170) total participants and eighteen (18) municipalities and seventeen (17) businesses represented. To date, MESP and twenty-seven (27) municipalities have established their construction permit and social impacts infrastructure19 fees using cost recovery principles. Table X. Construction Permit and Social Impact Infrastructure Fees20 Municipality Construction Permit Fee (€ Social Impact 18

Ministry of Environment and Spatial Planning Administrative Instruction No. 22/2012 on Construction Permit Administrative Fees and Infrastructure Regulatory Charges, adopted by MESP in November 2012. 19 Social impact infrastructure fees are based on the total cost of municipal services and the number of persons to arrive at a per-person fee that can be assessed with there is a demonstrable additional burden on municipal services to be delivered. 20 Social impact infrastructure fees (technically designated “Increased Density Infrastructure Regulatory Charges” under the Administrative Instruction) are set out on a cost per capita of municipal services and represent a fee charged for an increased burden on municipal services as a result of the construction work in question. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

28

per square meter)

Infrastructure Fee (€)

1. Mitrovica

2.96

103.02

2. Peja

2.53

100.69

3. Novo Brdo

2.82

144.32

4. Hani i Elezit

3.03

96.63

5. Viti

2.57

89.00

6. Shtimë

1.50

113.00

7. Obiliq

3.87

101.02

8. Gracanica

3.48

149.18

9. Strpce

2.61

98.98

10. Junik

2.80

69.82

11. Malishevë

2.62

140.32

12. Ferizaj

2.70

117.65

13. Kamenica

3.30

141.12

14. Drenas

3.16

106.73

15. Vushtrri

2.54

117.95

16. Skënderaj

2.39

121.01

17. Pristina

9.96

277.11

18. Gjilan

2.56

118.20

19. Kaqanik

3.56

119.03

20. Fushë Kosovë

2.75

128.81

21. Istog

2.56

99.87

22. Lipjan

2.30

177.82

23. Gjakova

2.57

103.00

24. Suhareka

3.77

115.03

25. Decan

3.06

96.07

26. Podujevo

2.70

100.28

27. Klinë

2.13

97.23

28. MESP (Class 3)

3.08

-

To further streamline construction permitting and ensure proper compliance review with the Construction Code, USAID|BEEP is assisting MESP to develop an AI on the construction permit review process. This AI establishes efficient, reasonable, and consistent processes for submitting and reviewing applications for terms of construction and construction permits. Similar to the cost recovery-based fee setting, USAID|BEEP supported MESP’s training of internal staff to then train municipalities on issuing construction permit permits. The Project additionally supported MESP to develop and adopt AIs on the Categorization of Construction Works21 and on Construction Works

21

Ministry of Environment and Spatial Planning Administrative Instruction No. 09/2013 on the Categorization of Construction Works. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

29

for which a Construction Permit is not Required22 to better inform risk-based permit review and inspections. A critical part of the abovementioned plan review process is ensuring compliance with minimum health and safety technical requirements. To establish these technical requirements, USAID|BEEP supported MESP, through an established working group consisting of private and public sector stakeholders, to develop a universally-applicable Construction Code that incorporates relevant elements of EuroCodes and that can be implemented in Kosovo. Below are the contents of Kosovo’s Construction Code. Table X. Construction Code Contents Section 1: Administrative/Legal Chapter 1: Administrative/Legal Section 2: Structural Chapter 1: Concrete Structures Chapter 2: Masonry Structures Chapter 3: Steel Structures Chapter 4: Timber Structures Chapter 5: Composite Steel and Concrete Structures Chapter 6: Geotechnical Works Section 3: Buildings Chapter 1: Windows and Doors Chapter 2: Energy and Energy Performance of Buildings (Thermo Insulation) Chapter 3: Residential and Apartment Buildings Chapter 4: Noise Section 4: Mechanical Installations Chapter 1: Ventilation and Air Conditioning in Buildings Chapter 2: Chimneys on Buildings Chapter 3: Heating and Cooling of Buildings Chapter 4: Lifts Section 5: Electrical Installations Chapter 1: Low Voltage Electrical Installations Chapter 2: Lightning Systems Section 6: Plumbing Installations Chapter 1: Plumbing Installations Section 7: Handicap Access Chapter 1: Handicap Access Section 8: Fire Safety Chapter 1: Fire Safety Glossary Chapter 1: Terminology 22

Ministry of Environment and Spatial Planning Administrative Instruction No. 08/2013 on Construction Works for which a Construction Permit is not Required. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

30

The

Construction

incorporates international

a

Code

number standards

of to

establish the minimum required technical norms in Kosovo. In connection with implementation of the Construction Code, and discussed below in Component Two, USAID|BEEP supported the Kosovo Standardization Agency (KSA) to install a internationallyharmonized

Standards

Management Information System Masonry construction BEFORE the pre-apprenticeship training

(SMIS). This improves private

Masonry construction AFTER the pre-apprenticeship training sector access to standards; increases interconnectivity between government institutions for improved standards sharing; and promotes a more inclusive process in the standards adoption process in Kosovo. Compliance with international construction standards requires not only the use of specified materials and engineering design, but also the hands-on application of industry practice in each construction trade. A local vocational school in Skënderaj, the Center for Competence, has put in place the beginnings of a modern construction curriculum tailored to specific trades, including masonry, electrical and plumbing, to name a few. USAID|BEEP during May 2013 assisted the Center USAID Business Enabling Environment Program Final Report July 2010 – July 2013

31

in carrying out an intensive 20-day apprenticeship training on reinforced masonry to apply industry practice consistent with the Construction Code. The pre-apprenticeship program contributed to further the implementation of construction reform in a number of ways, including by providing training to the school’s instructors and helping to create the institutional capacity to provide training in modern construction techniques and the technical norms of the new Construction Code. In addition, the pre-apprenticeship program helps create a professional construction work force in Kosovo trained in those modern techniques and norms. Spatial planning. The construction permit serves a useful public service by facilitating not only the review of construction plans to ensure that they meet minimal safety requirements, but also that their intended use complies with national and local spatial plans. Spatial plans are important because they provide predictability in land use by clearly setting out use restrictions on land parcels and protecting property rights of neighboring land parcels. In this way, for example, residential areas are separated from areas to be used by potentially intrusive industrial activities. MESP, wanting to harmonize the Law on Spatial Planning with the new Law on Construction, requested USAID|BEEP's assistance in its development. The Project provided significant commentary and accompanying policy rationale to MESP on the draft. Utilizing this draft, MESP, with USAID|BEEP support, solicited public comment and held rigorous debate. Based on the comprehensive public outreach, MESP received the most-ever comments on any draft law in its history. With Project support, MESP then reviewed public comments and incorporated them where useful. The draft Law embraces the evolving European approach and free market principles to establish a clear and predictable framework for spatial planning. Under the draft, it is envisioned that MESP develop and refine a National Zoning Map and Spatial Plan that serves as a baseline for all parcels in Kosovo. With this in place, if municipalities lack urban regulatory plans (plans that govern in more detail land use restrictions at the local level) the construction permit applicant can refer to the national plan so as to avoid delays. The USAID|BEEP-support draft Law on Spatial Planning was approved by the Government on December 7, 2012 and passed the first reading in Parliament in February 2013. Program for the Treatment of Constructions Without Permit. Through a previously-ambiguous and difficult-to-navigate construction permitting process, constructions in Kosovo were often unpermitted; unduly restricting the property tax base and creating barriers to property protection and to using the asset in other transactions. Recognizing these barriers and the problems associated with unpermitted constructions, including the difficulty of enforcing property rights and the potential for unsafe buildings, MESP wants to develop a fair and transparent program to legalize those constructions. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

32

With USAID|BEEP as its designated implementing partner in construction reform, MESP requested the Project's assistance in developing its draft Law on the Treatment of Constructions Without Permit. The goal of this law is to establish a program for owners of previously-unpermitted constructions to come forward and legalize their buildings. The legalization process under the draft Law is expected to closely mirror that of the construction permitting process; utilizing both a review of compliance with mandatory technical requirements through the Construction Code and compliance with spatial planning. MESP, with Project support, developed a new draft Law on the Treatment of Constructions Without Permit and submitted it to the Government on December 11, 2012 where it was approved later that month. It is expected that the draft Law will be approved in late 2013 and implementation will take place over a 3 – 5 year period. Permissive System and Inspections. As mentioned previously, it was common practice in Kosovo for authorities to unnecessarily use the regulatory system as a means

of

raising

revenue.

Additionally, there existed no common understanding or use of

permissive

system

terminology (e.g. permit, license, registration,

etc.).

Follow-on

inspections of permissive system requirements often

similarly

were

over-burdensome

conducted

and

with

nearly USAID|BEEP Deputy Chief of Party and Component One Lead at a workshop to unfettered discretion. In totality, finalize the draft Law on Inspections these administrative burdens acted as strong dis-incentives to investment and created distrust of government institutions. To reduce these barriers to business operation, USAID|BEEP supported an effort to rationalize limitations on free economic activity (i.e. the permissive system) and establish a more rational footing for follow-on inspections. The OPM, with USAID|BEEP support, developed draft Laws on the Permissive System and Inspections that envisioned clearly-established frameworks for the issuance of permissions and the conducting of inspections, and set out clear definitions for permissive system and inspections terminology. Principal features of the draft Law on the Permissive System included the following:

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

33



A Proper Role for Government Regulation of Private Activity. The draft Law set out to create a framework that limits government regulation of private activity to that which is necessary to protect public health and safety while prohibiting regulation that is unduly burdensome or unwarranted. Its approach will both make it easier to engage in commercial activity in Kosovo by eliminating unnecessary business constraints; and also increase the protection of public health and safety by focusing government regulation on areas where it is truly needed.



Streamlined Framework. The draft Law creates a simple yet effective framework for government regulation by providing for four types of permissions, including notices, registrations, permits and professional licenses.



Rational Relation to Assessed Risk. The draft links each type of permission to a level of risk that a government regulator must determine objectively in order to justify requiring the permission for a particular activity. This will introduce harmony and uniformity in the regulatory actions of government bodies and bring them into conformity with the requirements of a market economy and good governance.



Transparency. The draft law requires a regulatory authority to make publicly available all the rules, requirements and procedures related to each permission; as well as information on each permission issued.

Similarly, principal features of the draft Law on Inspections included: 

Direct Links to the Law on the Permissive System. The draft provides that inspections may be conducted only with respect to risk-related activities that are regulated under the Law on the Permissive System.



Emphasis on Citizens’ Rights and Defined Powers of Inspectors. The draft Law is based on the application of international best practice to the Kosovo context and devotes considerable attention to protecting the rights of citizens vis a vis the inspector; to defining clearly inspectors' powers (and the limits thereof); and to the proper procedures to be followed in inspections. The draft also places emphasis on the citizen's right to know the scope and frequency of a permissible inspection.



Emphasis on Encouraging Compliance Rather than Imposing Fines. The draft provides that a citizen is generally given the opportunity to correct a violation within a reasonable timeframe, and that no fine is imposed unless the citizen fails to do so. This represents a dramatic change from the current approach, and the perception that the purpose of inspections is to raise revenue. Consistent with this, the Project has advised that

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

34

national and municipal bodies not include in their budgets revenues from inspections fines, which is the current practice, but to treat imposed penalties as unplanned revenue. This shift in the role of inspections is essential to creating an environment where violations are punished, but both citizens and regulators work together to implement required health and safety considerations in the overall interests of the people of Kosovo. The Project supported the National Council for Economic Development (NCED) to promote the draft laws and prepare for a future guillotine review of permits and licenses. To support a future guillotine review, the Project in August 2012 submitted to the LO of the OPM a concept paper on the permissive system that premised on the above-mentioned principles, describing, among other things, the different types of permissions using internationally-consistent terminology; articulated the narrow circumstances under which application of such a permission to limit free activity is appropriate; and demonstrated the necessary linkages between permissions and the follow-on compliance assessment mechanisms such as inspections. Using the concept paper, USAID|BEEP in October 2012 sponsored a working session, that included representatives from the LO OPM, International Finance Corporation (IFC), and MTI to develop the Guillotine Review Manual that would act as the basis for reviewing government permissions. The Manual, approved by the government, will be the basis for the guillotine review, and is expected to take place with adoption of the Law on the Permissive System later in 2013. Support to the Women’s Group G7. Seeking to form an umbrella organization to further women’s issues in the economic sphere, USAID|BEEP is supporting a local subcontractor to assist the “Founding Group” of prominent Kosovar women to determine the best legal form for the organization’s establishment. Based on discussions with counterparts, including USAID and the Founding Group, the subcontractor recommended that the NGO form would be advantageous and should be considered. Based on discussions with USAID, the subcontractor provided all necessary documentation for registration as an NGO, and the registration was successfully completed. C1-4: INCREASE PUBLIC ACCESS TO AND KNOWLEDGE OF LAW AND LEGAL REFORMS THROUGH DEVELOPMENT OF LAW ON NORMATIVE ACTS AND LEGAL INFORMATION DATABASE; AND STRENGTHEN THE OFFICE OF THE PRIME MINISTER

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

35

Legal Information Database. A fundamental component of good governance is making public and easily accessible all governing normative acts. In Kosovo, however, this was not common practice for all governmental institutions. Additionally, there was no centralized information center for such normative acts, requiring businesses and citizens to expend tremendous energy searching for information. This is a burden on businesses and citizens as it presented a significant challenge in knowing and understanding their rights and obligations under the law. Not only did this create the opportunity for arbitrary enforcement, but acted as a disincentive to investment due to the lack of transparency and predictability in the legal regime. Identifying this critical omission, USAID|BEEP worked with the Legal Office (LO) and the Office of the Official Gazette (OOG) of the Office of the Prime Minister (OPM) and the Ministry of Public Administration (MPA) to establish the first-ever consolidated, electronic, searchable legal information database (LID). In collaboration with these institutions, USAID|BEEP assisted the government to take a landmark step toward more democratic and market-oriented governance. The Legal Information Database is the first of its kind in Kosovo, containing all normative acts in force and creating an online, searchable, and publicly accessible resource for accessing normative acts.

The first step in this process was to

With elimination of these sub-normative acts, USAID|BEEP assisted the Office of the Prime Minister to establish the firstever regulatory baseline in Kosovo.

clearly demarcate a regulatory baseline. The Project co-sponsored a working session in 2011 to identify unnecessary and redundant AIs. From the one thousand five hundred (1,500) AIs identified, the task force compiled a list of over three hundred and seventy (370) that

it

recommended

for

rescission.

Accepting

the

recommendations of the task force, Prime Minister Thaçi signed

Decision Nr. 08/35 in September 2011, which clearly published for the first time the complete list of all AIs in force in Kosovo with the provision that any AI not included in the list was deemed null and void. This applied to the more than three hundred and seventy (370) AIs that the task force identified as well as any other AIs that the Government did not identify. The Decision established a clear regulatory base in Kosovo from which to go forward. As the next element for establishment of the LID, USAID|BEEP sponsored a second review of subnormative acts in April 2012. This second session was a substantive review of all GoK sub-normative acts. At this session, all ministries and representatives of the OPM attended and worked diligently to narrow the regulatory base. With the goal of making the regulatory environment more conducive to free economic activity, the working group designated seventy-two (72) sub-normative acts for elimination. The group also earmarked any remaining sub-normative acts that contained a license, permit, or registration requirement for a future guillotine review under the umbrella of Permissive System and Inspections reform. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

36

In June 2012, the OPM issued a Decision officially abolishing the list of seventy-two (72) subnormative acts identified during the working session23. This elimination of over four hundred and forty (440) AIs represented another crucial step in the collaborated effort with the government to establish the LID. With the normative act inventory in place, USAID|BEEP, through a local subcontractor, developed the necessary software that would house the acts in a searchable format. In total, more than two thousand (2,000) acts were consolidated, translated into all required languages, “tagged” with relevant information to make them more easily searchable across a number of useful search categories, and migrated into the database. In June 2013, the GoK, with USAID|BEEP assistance launched the landmark LID. (http://gzk.rks-gov.net). Law on Normative Acts. During 2011, USAID|BEEP and the Head of the Office of Legal Services (OLS) of the OPM forged an agreement to work together to develop a Law on Normative Acts (LNA) to complement the LID. The LNA established requirements for the development of normative acts – laws and regulations – that, among other things, required government bodies to conduct impact assessments and provide reasonable opportunity for public notice and comment. The LID made it possible to create complete transparency with respect to all the laws and regulations that are in force, enabling businesses, for example, to become aware of their rights and obligations under the law, and ensuring that no acts can be applied unless they have been made known to the public. USAID|BEEP sponsored an intensive working session with the LO of the OPM in June 2013 to finalize the draft LNA. This draft is expected to be carried forward to the Government Meeting and Parliament following the Project's completion.

23

Decision of the Office of the Prime Minister Nrs. 01/81 - 07/81.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

37

COMPONENT TWO: REDUCED BARRIERS TO TRADE Component Two: Lower Trade Barriers. Component Two focused on the reduction of barriers to trade to facilitate increased commerce and international cooperation, as well as the implementation of regional and multilateral trade agreements. Long-term growth is enhanced when a more liberal trade regime is implemented. Unambiguous rules and regulations that guarantee the free and fair movement of goods and services are fundamental to increased trade. For Kosovo to realize the benefits of more efficient trade, a combination of strategies is required: implementation of sound, market-based trade policies and modernization of trade-related institutions; institutionalization of a strong, liberalized business regulatory framework; strengthening of basic market institutions; and the implementation of transparent policies that attract foreign direct investment. For these reasons, Component Two assisted the Ministry of Trade and Industry with institutional reforms and Kosovo Customs on activities involving private sector partners (clearing agents, transporters, and business associations). The aim was to streamline trade-related activities through broad-based consultative mechanisms – involving private and government stakeholders in the formulation, implementation, assessment, and fine-tuning of trade policy and customs procedures. C2-1: IMPROVE THE LEGAL FRAMEWORK FOR IMPORT AND EXPORT TRANSACTIONS Law on External Trade. USAID|BEEP assisted the Ministry of Trade and Industry (MTI), at the MTI’s request, to develop a revised Law on External Trade. The new Law addressed the outdated nature of the law then in force. The Project’s goal in developing the new Law was to set a transparent framework for foreign trade based on World Trade Organization (WTO) principles and agreements, as reflected in European Union (EU) practice. This means that any restrictions on external trade must be transparent, provide the necessary procedural safeguards, and be imposed in accordance with international best practice. Working with the MTI, the Project developed proposed updates for improving the existing Law based on earlier recommendations provided in the Gap Analysis of the Kosovo Legal Framework for External Trade. At the end of September 2011, the Parliamentary Commission held a public hearing on the existing Law on External Trade Activity where USAID|BEEP provided technical advice and discussed all of the proposed changes.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

38

The Parliamentary Commission then held a public hearing on the existing Law on External Trade Activity where the Project provided technical advice and discussed all of the proposed changes. Taking into consideration discussions at the public hearing, USAID|BEEP submitted comprehensive recommendations on the Law to the Deputy Prime Minister and The Law on External Trade helped establish a stronger legal framework for trade through more streamlined procedures for trade.

Minister of Trade and Industry. The Project provided technical support to the MTI and members of the reviewing

Parliamentary

Commission

to

ensure

that

all

of

USAID|BEEP’s recommendations were carefully considered. The Project’s assistance came to a successful conclusion as the Law was adopted by Parliament on November 14 and it was signed into law by

the President on December 2, 201124. Law on Safeguard Measures. Safeguard measures are one of the three WTO authorized contingency measures that provide remedies to affected parties when faced with increased imports that cause injury to domestic producers of a like product. Governments may take temporary emergency action against imports that are hurting domestic producers as long as they follow all proper WTO procedures. During the effective period, safeguard measures allow domestic businesses time to capitalize on productivity improvements and increase market competitiveness. In mid-August 2011, USAID|BEEP provided technical advice before the Parliamentary Commission for Economic Development, Transport, Infrastructure, Trade and Industry concerning a clause-byclause review of the Law. Later in August, the Component Two technical team participated in a meeting before the Parliamentary Commission to provide additional technical support and respond to Commission questions regarding the draft. Based on the Project’s recommendations, the Kosovo Assembly adopted the new Law on Safeguard Measures on August 31, 201125. Under the Law, the MTI must adopt implementing regulations before taking action with regard to invoking trade remedies. Partnering with Government counterparts, the Project developed draft regulations in accordance with international best practices. These regulations have not been adopted by the MTI. Law on Anti-dumping and Countervailing Measures. In early November 2011, the MTI asked the Project to review the Law on Anti-dumping and Countervailing Measures26. The current law invokes European Commission (EC) regulatory actions regarding the application of anti-dumping and countervailing measures in Kosovo. Unfortunately, this means that the law is not able to be applied domestically because the EC regulations provide for an operational role for the European 24

Law No. 04/L-048 on External Trade (2011). Law No. 04/L-047 on Safeguard Measures on Imports. 26 Law No. 03/L-097 on Anti-dumping and Countervailing Measures. 25

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

39

Commission in the administration of anti-dumping and countervailing investigations, and Kosovo is not a member of the European Union (EU). The MTI requested the Project’s assistance to harmonize the law for application domestically, while maintaining international best practice. In

February

2012,

USAID|BEEP

completed

its

analysis

and

recommendations for amending the current Law on Anti-dumping and Countervailing Measures. The proposed amendments would, among other things, eliminate all legal references to EC procedures and

Anti-dumping and countervailing measures are two of the WTO-supported contingency measures for a more predictable trade environment.

institutions (again, because Kosovo is not a member of the EU), clarify definitions of terms, and implement the notification requirements of the Central European Free Trade Agreement (CEFTA) when CEFTA requirements apply. The Project submitted its recommendations to the MTI and held internal technical discussions on the proposed amendments with the Trade Department. A new law has not to date been adopted. To promote dialogue regarding recommendations, the Project included technical discussions in a workshop on trade contingency measures. In addition, USAID|BEEP produced the Standard Operating Procedures (SOPs) for the application of these trade remedies, which, if adopted, would allow the amended Laws to be applied in Kosovo consistent with international requirements and best practice. Each SOP manual provides an overview of and procedures for investigations, determination of injury and causation, steps to final determination, and a review of the respective law. Law on General Product Safety. In November 2011, the Project provided the MTI with a critical review of the draft Law on General Product Safety. USAID|BEEP presented recommendations to remove unnecessary barriers to trade activity at the Parliamentary Commission on Economic Development, Infrastructure, Trade and Industry meeting to discuss the draft law. The Commission embraced these recommendations and eliminated unnecessary inspections and excessive penalty provisions which would have given arbitrary and discretionary power to MTI officials to unnecessarily regulate the market in Kosovo. This was also important as USAID|BEEP continued its efforts to rationalize the Permissive and Inspections Systems in Kosovo. Parliament passed the new law in early 201227. Insurance-backed customs guarantees. To secure the payment of tariffs and fees on trade transactions, Kosovo Customs regularly requires bank guarantees. These guarantees, however, are often expensive and many times require full collateralization, creating a clear impediment to trade.

27

Law No. 04/L-078 on General Product Safety.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

40

As a trade facilitation measure, USAID|BEEP recommended the introduction of insurance-backed customs guarantees (customs bonds). Better positioned to assess and price risk, insurance companies can offer the same guarantees at a lesser cost and with payment of only a premium. Kosovo

Customs

and

the

Ministry of Finance (MoF) have stated

their

introducing

interest the

in

customs

guarantees, but said that they would do so at a later time as part Customs bond workshop for the Kosovo Insurance Association, Customs, the Ministry of Finance and other stakeholders

of

a

comprehensive

approach to trade and fiscal reform. The Project has provided

the GoK with all enabling information to move forward with this initiative. Trade Education Programs. In December 2011 the Project conducted a Workshop on International Trade for Members of Parliament. The objective of the Workshop was to familiarize members on the various aspects of the WTO, what Observer Status would mean for Kosovo, and on the related rights and obligations Kosovo has under the Central European Free Trade Agreement. Similarly, in January –

USAID|BEEP Component Two short-term trade expert and Component Lead conducting an international trade workshop

February 2012 USAID|BEEP prepared a proposed update to the Trade Policy of Kosovo 2009 and then conducted a one week training course for the MTI and other stakeholders explaining the update. World Trade Organization (WTO) observer status. In October 2011, the MTI requested that the Project prepare a cost-benefit analysis of WTO observer status for Kosovo and draft the legal instrument for formal application. In November, Component Two prepared the requested analysis which concluded that observer status would be beneficial for the country and a draft legal instrument for Kosovo’s application for observer status to the WTO. USAID|BEEP delivered both the analysis and

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

41

draft legal instrument to the Deputy Minister of Economic Development and Minister of Trade and Industry. The Government has the matter of observer status under review. Customs Code. Early in the Project, USAID|BEEP identified revisions to the Customs Code then in force as a vehicle for reducing barriers to trade as it did not incorporate many of the important objectives and principles incorporated in the WCO’s Revised Kyoto Convention and the 2008 EU Customs Code. It was then identified that a revised Customs Code would provide the legal authority for many internationally-accepted trade facilitation measures that were not authorized under the then-existing Code. Working with the Legal Department at the Ministry of Finance and the Director General of Kosovo Customs, USAID|BEEP developed recommendations to amend the Customs Code and bring it closer to international best practice. Among other things, the proposed amendments focused on:  Voluntary Compliance. A priority activity for modern tax and customs administration is the introduction of ways and means to augment, to the greatest extent possible, voluntary compliance with fiscal law for both direct and indirect taxes. The fundamental basis of modern fiscal law is the principle of self-declaration. For both income tax and for customs duty and VAT on imports, the onus in law must be clearly placed on the taxpayer, trader or duly authorized third-party representative to complete a tax return or a customs goods declaration fully and truthfully, and to determine the amount(s) of tax, duty or other levies that are lawfully payable.  Risk-based Controls. The use of risk management and post-clearance audits allows modern customs administrations to accord special, simplified treatment to traders who meet specified criteria, such as a good compliance record, satisfactory audits, and/or the maintenance of records in an approved manner, etc. Traders accorded these privileges may be termed authorized economic operators, reducing the time needed to clear goods and the level of effort required on the part of Customs.  Transparency. In conjunction with the principle of self-declaration, the responsibility must on Kosovo Customs to provide technical information in a transparent form and manner that will inform the taxpayer / trader and thus provide the capacity for taxpayers to comply voluntarily with fiscal, customs and trade law.  Stakeholder Consultations. Modern customs laws direct the customs administration to inaugurate a formal consultative mechanism(s) with private sector clients and partners. No such provisions were found in the Customs Code of 2008, representing a major shortcoming.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

42

 Reduced Administrative Discretion. Pursuant to international customs administration, importers, exporters or their authorized representatives are at liberty to make a declaration under whichever customs procedure they require for their business (import, export, warehousing, transshipment, coastwise carriage, inward processing, etc.) This is a trader’s fundamental right and obligation under modern customs practice. There is no valid need for any additional permissions or approvals from Customs officials.  Goods Samples. The Code should provide that in all cases, the sample taken by an officer (for testing related to a determination of classification, value or origin) shall be returned to the owner. The law must clearly articulate procedures for disposal or return of goods samples taken by Customs. In March 2012, the Director General of Kosovo Customs agreed to move forward with the Project analysis and recommendations. Upon submission, the Project provided technical advice and support on the draft law to the Parliamentary Commission on Economic Development, Infrastructure and Trade & Industry when it reached the Kosovo Assembly. Finally, the revised Customs Code was adopted in Parliament and signed by the President in May 201228. C2-2: SUPPORT FOR STREAMLINED IMPORT AND EXPORT PROCESSES Trading across Borders Scenario Analysis and reduction of import and export documentary requirements. An important tool for assessing reduced barriers to trade efforts in Kosovo is the World Bank’s “Doing Business Trading across Borders” annual survey, which measures time, costs, and documents required to import and export goods, using a standard methodology. As reported in the DB Trading Across Borders 2012 report, Kosovo ranked 131 out of 183 economies studied – the lowest performance in the region for that year. In

September

2011,

USAID|BEEP

developed the Trading Across Borders Scenario

Analysis,

making

recommendations to effect positive change Goods passing through a Customs warehouse

to all indicator measures and reduce the time, costs, and documents required for

import and export. The Scenario Analysis addresses recommendations regarding actions to be taken by Kosovo Customs. 28

Law No. 04/L-099 on Amending and Supplementing the Customs and Excise Code in Kosovo No. 03/L-109.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

43

Upon receipt of the Scenario Analysis, critical external stakeholders, including the Director General of Customs, the Director of the MTI Trade Department, and MTI Ministerial Advisors, provided valuable input and voiced their willingness to rapidly implement recommendations. Subsequently, Kosovo Customs adopted Internal Administrative Instruction No. 01/2011 on October 25, 2011. The new AI eliminates six (6) of the eight (8) documents required for export and five (5) of the eight (8) documents required for import as recorded by the DB 2013 report29. USAID|BEEP’s monitoring efforts preliminarily revealed that importers and exporters were continuing to produce unnecessary documents because Customs had not sufficiently advertised this reform. USAID|BEEP quickly focused efforts to inform businesses about the reduced documentary requirements and to monitor implementation, including a comprehensive media campaign, discussions with the Spediteurs Association, and visits to Customs border points. The Project’s follow-on monitoring found that spediteurs were no longer requesting the additional documents from their clients. Based on USAID|BEEP recommendations, the Director General of Kosovo Customs ordered that all Customs Offices posted a notification outlining the changes and updated documentary requirements. Particularly important, cost and time savings are realized more effectively now that importers and exporters are aware of the reduced documentation requirements. These reforms contributed to a reduction in the costs to import and export as captured by the Doing Business reports through improved capacities within Kosovo Customs and the MTI and streamlined operational procedures. Businesses have realized a $455 and $470 savings per transaction for export and import transactions, respectively, comparing the Doing Business 2013 and 2011 reports in the "Trading Across Borders" indicator. The table below reflects the reduction in import and export transaction costs and the reduction in these costs as a percentage of Gross National Income (GNI).

29

According to the AI, the export declaration and accompanying commercial invoice are the only two documents required by Kosovo Customs for export transactions. Similarly, the bill of lading, CMR, and packing list are the only three documents required by Kosovo Customs for import transactions. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

44

Customs import/export registration requirement eliminated. Based on USAID|BEEP recommendations, the Director General of Kosovo Customs eliminated the need for import/export businesses to register with Customs for international trade transactions. Only spediteurs are now required to register with Customs as third party representatives. In addition, spediteurs must have a power of attorney in order to provide cargo clearance services on behalf of importers and exporters.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

45

C2-3: BUILD CAPACITY TO INSTITUTIONALIZE TRADE BEST PRACTICE Support to Kosovo Standardization Agency. The adoption of international standards is crucial for establishing clear and internationally-harmonized technical regulations in the domestic regulatory regime. As the competent body in Kosovo for adopting these standards, the Kosovo Standardization Agency (KSA) is at the heart of this process. The KSA currently utilizes a simple database that makes it difficult to manage adopted standards. Additionally, there is little to no standards sharing across government institutions due to, among other things, the lack of an accessible standards management system. Disharmonized and unclear technical regulations often result from this lack of standards sharing. Finally, and most importantly, the public has little access to adopted standards, making it nearly impossible to comply with regulatory technical requirements. Recognizing this gap, USAID|BEEP supported the KSA to identify a Standards Management Information System (SMIS) solution. Recognized internationally as one of the prominent standards institutions, the Spanish Association for Standardization and Certification (AENOR) proposed an International Organization for Standardization (ISO)-harmonized SMIS that would help put KSA on the leading of edge of standards management. The AENOR solution had the added benefit of being translated already into the Albanian language (one of the primary

languages

used

by

GoK

institutions) due to a similar SMIS installation at the Albania General Directorate of Standardization (DPS). USAID|BEEP and the KSA visited the DPS

to

including USAID|BEEP visit to the Albanian Standards Directorate to observe the AENOR Standards Management Information System

observe the

interconnections

user

its

functionality, interface

with

and other

government institutions. As a party to

the visit, the Head of the KSA voiced his satisfaction with the system and recommended moving forward on this important initiative. AENOR completed installation of the SMIS at the KSA and MPA in June 2013 and it has been fully integrated.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

46

Trade Policy Working Group. Encouraging open, transparent dialogue with all stakeholders is key to the development of democratic institutions. Improving the business environment depends on meeting the needs of business through identification and elimination of unjustified intervention in private sector activity. With USAID|BEEP support, the GoK established the Trade Policy Working Group (TPWG) to address trade-related issues, creating a forum for public-private dialogue. The working group is made up of five sector-specific sub-groups on Agriculture; Manufacturers; Trade Agreements; Trade Facilitation; and Services. The TPWG includes members from the public and private sector, including the MTI, MoF, Kosovo Customs, Ministry of Agriculture, the Kosovo Chamber of Commerce, AmCham, TAK, and the World Bank. The TPWG is the focal point of all trade issues as Kosovo moves towards membership in the European Union (EU) and also will be the channel for private sector perspectives as Kosovo moves towards

The Trade Policy Working Group provides the private sector with a national-level platform to identify, discuss and remedy trade issues, and creates a forum for intergovernmental trade policy coordination.

observer status and eventual membership in the WTO. At the end of November 2011, the TPWG held its first Agriculture Subgroup meeting. During the meeting, the Project intervened on a number of occasions to get participants to focus on specific issues, creating a unified approach to address trade-related concerns. In the past, trade issues were dealt with on an ad hoc basis and created confusion, inconsistency in policy and practice, and unnecessary barriers to business. Addressing private concerns in this way represents a crucially important change in the GoK's approach to governance. Following the success of the Agriculture Sub-group, the MTI Trade Department asked the Project to assist planning for the first meeting of the Trade Facilitation Sub-group in late December 2011. Component Two provided technical and managerial advice to the Trade Department and made a presentation on state-of-the-art worldwide trade facilitation initiatives from the perspective of Kosovo. A major outcome of the first meeting was that the Sub-group members committed to advocate for a modernized Customs Code based on the 2008 EU Model Code. At the Trade Facilitation Subgroup in early February 2012, USAID|BEEP presented a concept paper discussing recommended amendments to the Customs Code from the perspective of trade facilitation and modern Customs administration. Here, business representatives on the Subgroup expressed the need for adoption of a number of trade facilitation measures and provisions in the Code, in accordance with international standards. The intention of the presentation was to empower the business community with the necessary technical knowledge and background to advocate for an improved Customs Code. The follow-on advocacy proved critical to adoption of the

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

47

USAID|BEEP-supported amendment to the Kosovo Customs and Excise Code discussed in C2-1 above. The Industry Subgroup met for the first time in March 2012 where six (6) major producers participated in the discussions. USAID|BEEP presented reforms in favor of improving the efficiency, productivity, and competiveness of domestic exports in regional and international markets. Following this meeting, USAID|BEEP provided significant assistance to track issues noted by businesses for follow-on action by Kosovo Customs and the MTI. In June 2012, the Project provided

guidance

to

support MTI management on the third plenary session of the TPWG. This included (1) support to review all trade

issues

businesses

raised

in

the

by four

project-supported subgroups and actions taken by the GoK in response and First meeting of the Industry subgroup of the Trade Policy Working Group

(2)

an

update

Kosovo

Trade

of

the Policy

(discussed in more detail below). The Deputy Prime Minister for Economic Development chaired this session and outlined next steps for the work of the TPWG under the auspices of the National Council for Economic Development (NCED). The TPWG is expected to provide a crucial platform for raising and addressing trade-related concerns beyond the life of USAID|BEEP. Metrology, Accreditation, Standardization, and Quality (MAS-Q). In addition to streamlining procedures and removing operational hurdles, reducing technical barriers to trade represents a crucial component of improving the trade environment. Establishing a harmonized, rational, and transparent system for the adoption of international standards, creation of mandatory technical requirements, and implementation of an effective system for compliance assessment is an essential part of reducing these technical barriers. These are all pieces of the overall “best practice” Metrology, Accreditation, Standardization and Quality (MAS-Q) framework, which is designed to protect the public health and safety. Technical requirements that go beyond best practice protection are considered technical barriers to trade.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

48

In early August 2011, the Project carried out interviews and factfinding visits with the Kosovo Metrology Department (KMD), Kosovo Accreditation Directorate (DAK), Standardization

and Agency

Kosovo (KSA)

units at the MTI. Through these interviews, USAID|BEEP identified preliminary issues related to MAS- USAID|BEEP MAS-Q workshop for the Ministry of Trade and Industry and Q in the Kosovo framework,

the Kosovo Customs

noting, among other things, the lack of accredited laboratories, an opaque system for adoption of mandatory technical requirements, and the need for improved compliance assessment. The Project also held a MAS-Q workshop for the relevant officials from the Ministry of Health, the Ministry of Agriculture, Kosovo Customs, the MTI, the Food and Veterinary Agency, and several private sector laboratories, and developed an informative and action-oriented report that was shared with the MTI. The workshop focused on explaining the role of the MAS-Q system in the overall regulatory framework, its importance to trade and competitiveness of domestic goods and services, and unnecessary barriers that individual domestic systems can create. Based on the Project’s findings, USAID|BEEP provided technical assistance for the development of training modules on MAS-Q. USAID|BEEP completed a training video package, which can now be used as an e-learning tool, and delivered copies to the Kosovo Chamber of Commerce (KCC), the Alliance of Kosovo Businesses (AKB), the American Chamber of Commerce, the Exporters’ Association, the Clearing Agents’ Association, Kosovo Customs, and the Trade Department at the MTI. Much of USAID|BEEP’s work in this area included development and implementation of the construction code and establishment of the SMIS at the KSA. Building the capacity of the trade-related institutions. An important part of USAID|BEEP activities was the training of trade-related bodies to build local capacities. Working with institutions like Kosovo Customs and the MTI, the Project “trained the trainers” through assistance to implementers for development of skills necessary to continue capacity building well into the future.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

49

To support future training initiatives, USAID|BEEP presented Kosovo Customs with a DVD recording of the Project’s Customs Valuation training course organized and delivered early in 2011 to importers, clearing agents, and customs officers. Also, the Project provided the MTI Training Department with a DVD on our previously-delivered Workshop USAID|BEEP Customs Valuation workshop in Prizren

on “Introduction to MAS-Q.” This was further developed into a unique training module for both

Kosovo Customs and the MTI. In late November 2011, the MTI and USAID|BEEP reached an agreement on the training the Project would deliver to the Trade Department. Topics included Standard Operating Procedures on antidumping, countervailing and safeguard measures for case officers, including those from Customs, the MTI, and the Ministry of Agriculture, Forestry and Rural Development. USAID|BEEP completed first drafts of the MTI Standard Operating Procedures and delivered a follow-on training course on these trade contingency measures. Officials who attended the course provided very positive feedback, noting a much improved understanding of procedures required for application of trade contingency measures. Further, the Project conducted an introductory training course on

international

trade

for

officers from the MTI Trade Department Department,

and

Legal Investment

Promotion Agency of Kosovo (IPAK),

Industry

Department,

Small and Medium Enterprise (SME)

Agency,

Intellectual USAID|BEEP Component Two workshop on trade remedies

Property Office, Customs, Agriculture, Health, Finance, Environment, and Food and Veterinary Agency in early February 2012. This training course provided an overview of the history of international trade, an analysis of the economics of growth related to international trade, economic analysis of trade policy, trends in trade over the last forty years including WTO Agreements, and a perspective looking forward to a new WTO Agreement on Trade Facilitation. Tariff policy update. The Project provided technical advice on tariff policy to the GoK. Currently, a single tariff rate of customs duty (10%) is assessed on virtually all incoming goods without regard to USAID Business Enabling Environment Program Final Report July 2010 – July 2013

50

trade policy. During the initial establishment of basic government institutions in Kosovo, a single tariff was easy to administer, transparent, and provided a mechanism for collection of revenues. Now, however, Kosovo is in a better position to more properly focus tariff policy as domestic institutions are more stable and sophisticated. To this end, USAID|BEEP worked with ministerial advisors at the MTI, with the Legal Director at the Ministry of Foreign Affairs (MFA), with the Director of the Trade Department at the MTI, and with the business community. Together the Project and these institutions examined opportunities to adjust tariff policy to better support

economic

development in the country, with particular concern for infant industries and key agricultural producers. Based on input from these various stakeholders, the Project

prepared

comprehensive National discussion on trade policy supported by USAID|BEEP

a

“Trade

Policy Update” which was

presented to the Deputy Prime Minister of Economic Development / Minister of Trade and Industry. USAID|BEEP informed senior MTI staff of the options available regarding trade policy. As a result, the MTI decided to take up the issue of changing tariff rates with the MoF to create a more favorable and sophisticated trade environment. The Trade Policy Update was a focus of USAID|BEEP training in February 2012 on international trade, attended by officers from the Trade Department, as well as officials from other ministries and private sector stakeholders. C2-4: DEVELOP AND PUBLISH INTERNATIONAL TRADE GUIDE (ITG) TO PROMOTE TRADE PREDICTABILITY International Trade Guide. USAID|BEEP in early March 2013 supported the Kosovo Chamber of Commerce to launch the online trade facilitation tool known as the International Trade Guide. Businesses wishing to conduct trade in or with Kosovo can now go online to review the necessary import and export requirements. The ITG contains important information such as tariff rates, traderelevant legislation, contact information for domestic organizations and government and financial institutions, a lexicon of commonly-used trade and customs terminology, and available mechanisms for alternative dispute resolution. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

51

Over the course of the Project,

USAID|BEEP

worked with government and private sector partners to

develop

comprehensive

the guide

to

shed light on requirements for trading with and in Kosovo. the

Kosovo International Trade Guide Launch Event

Partnering

with

KCC,

USAID|BEEP

consolidated

the

information and developed

an interactive, three-language, publicly-accessible website. This critical trade facilitation tool was launched on March 4, with discussion led by the KCC, Ministry of Trade and Industry, Kosovo Customs and the USAID|Kosovo Mission Director, Maureen Shauket, and with attendance from over two hundred (200) private and public sector participants. The ITG is available at www.itg-rks.com. “Now with this document businesses can understand easier and can fulfill faster their obligations that are the result of trade transactions” said the Deputy Minister of Trade and Industry, Cuneyd Ustaibo. With the assistance of USAID and the KCC, the trade landscape in Kosovo has never been more

“This Guide is an incredible help for the work that businesses do every day, and will help with the difficulties that businesses find at borders during export and import.” – Naim Huruglica, Director General, Kosovo Customs

transparent and easier to navigate.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

52

COMPONENT THREE: REDUCED RISKS OF LENDING IN THE FINANCIAL SECTOR Component Three: A More Efficient Financial Sector. Component Three aimed to increase access to finance and enable Kosovo lenders to make more informed decisions based on reliable credit information. Component Three personnel worked with the Central Bank of Kosovo (CBK) to ensure that more credit data is captured, that it is stored securely, that it is provided in a timely manner to authorized users, and that it is accurate. Furthermore, the CBK expanded the scope of the credit information system by working to add new data providers and to incentivize subjects of credit reports to check and update their own credit information. Additionally, the Project supported the CBK to upgrade its Credit Registry software, and assisted the CBK to implement the upgrade to ensure more accurate and timely credit information. C3-1: REVIEW WORLD BANK’S DOING BUSINESS REPORT AND MONITOR PERFORMANCE IN THE GETTING CREDIT INDICATOR Depth of Credit Information Index validated. At the request of the CBK, USAID|BEEP worked closely with the Credit Registry of Kosovo (CRK) to respond to World Bank questionnaires for purposes of scoring Kosovo in the “Getting Credit” indicator. In particular, USAID|BEEP helped to validate and confirm to the World Bank that the more than two years of historical credit information are distributed by the CRK. A question within this index asks “Are more than 2 years of historical credit information distributed?30” In the Doing Business 2011 report, the answer was “No” for Kosovo. Following the Project’s research efforts, USAID|BEEP sent all

Project Result 1: 20% Improvement in Projectsupported Variables of Doing Business Indicators Validating the “Getting Credit” indicator of the World Bank Doing Business report contributes to USAID|BEEP’s Project Result 1

corresponding clarifications to the World Bank. As a result, the Doing Business 2012 report recorded a “Yes” for this question, capturing the updated information and raising Kosovo’s score 1 point in this index. This clarification contributed to USAID|BEEP’s Project Result 1. Strength of Legal Rights Index validated. Again as part of “Getting Credit” validation efforts the Project analyzed whether businesses can pledge collateral using both specific and general descriptions of assets. In the Doing Business 2011 report, Kosovo records a “No” for question #3 in the Strength

30

World Bank Doing Business Report, Getting Credit indicator: http://www.doingbusiness.org/data/exploreeconomies/kosovo/#getting-credit USAID Business Enabling Environment Program Final Report July 2010 – July 2013

53

of Legal Rights Index, which asks “Does the law allow businesses to grant a non-possessory security right in substantially all of its assets, without requiring a specific description of collateral?31” After completing an extensive legal review of the pledge regulations and administrative instructions, an analysis of actual records in the registry and information gathered on banking practices in pledging assets, USAID|BEEP discovered that, in fact, a business can pledge collateral using either a general or specific description. The Project immediately sent clarifying information to the World Bank in this regard. However, the Doing Business 2012 and 2013 reports did not reflect this information. C3-2: FINALIZE UPGRADE TO THE CBK PUBLIC CREDIT REGISTRY Credit registry upgrade. The CBK in September 2012 launched the USAID|BEEP-supported Credit Registry software upgrade. This upgrade aimed to improve the availability and predictability of credit information and incentivize greater participation by businesses and citizens in the credit information system. In Kosovo, it was difficult for businesses and citizens to obtain their credit reports. They often had to visit the capital Pristina to physically request their report, and sometimes only receive it days later. Further, there were concerns about protection of borrowers’ privacy rights and accuracy of the data in the credit reports. Many borrowers and citizens had limited knowledge about their credit reports and how that impacted their access to finance. In combination with the Regulation on the Credit Registry improving borrowers’ rights, the software upgrade provides greater assurance to subjects of credit information and ensures improved data protection. Businesses and citizens also now have greater access to credit reports with the new upgrade (more information on the credit portal below in C3-2). In addition, financial institutions can more easily report to and access the Credit

Registry.

Already

financial

institutions have reported impressive improvements over the old system; within the first month, several banks Training for users of the credit information system

31

World Bank Doing Business Report, Getting Credit indicator: http://www.doingbusiness.org/data/exploreeconomies/kosovo/#getting-credit USAID Business Enabling Environment Program Final Report July 2010 – July 2013

54

reported a forty-five percent (45%) decrease in the time it takes to report credit classifications to the CRK. These banks, after only a month, reported up to an eighty-nine percent (89%) reduction in time. To properly implement the upgraded Credit Registry software, USAID|BEEP conducted comprehensive training for financial institutions as users of the credit information system. The Project trained four hundred (400) total participants over thirty-five (35) sessions. Users expressed positive feedback across all surveyed aspects, including, among other things, appearance, use, and functionality. As the underlying technology of the software upgrade, the Project provided Oracle-certified training for Information Technology (IT) staff of the CBK. USAID|BEEP conducted three (3) Oracle trainings from October to November 2012 for IT staff of the CBK, TAK and Kosovo Customs32. Covering Structured Query Language (SQL) fundamentals and database management practice, the Project trained twelve (12) participants at each event. The CBK and USAID jointly held a public outreach event on December 6, 2012 to promote the new CRK upgrade and announce a new credit portal where citizens and businesses can obtain their credit reports online. With keynote speeches from the CBK and USAID, the event was very well received by the public. To further promote the importance of credit and the improved data accuracy and predictability accompanying the Credit Registry upgrade, USAID|BEEP aired a four-week outreach campaign in December 2012 and January 2013. The media campaign utilized television, print media, internet and radio, reaching an estimated audience of over three hundred and eighty thousand (380,000) people33. Based on these improvements in the credit information system, USAID|BEEP supported a more than 150% increase in the number of credit report requests by businesses and citizens in the Project's final year (as compared to the July 2011 - June 2012 timeframe). The table below illustrates this increase in credit reports requests across the Project's lifetime.

32

Although Oracle training originated from the credit registry upgrade, TAK and Customs use Oracle-based technologies and joined as a matter of efficiency. 33 Estimated 351,530 for TV; 18,037 newspaper; 14,000 internet; and 1,054 radio. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

55

Public outreach. Further demonstrating its commitment to improve participation in the credit information system, the CBK released ten thousand (10,000) USAID|BEEP co-branded informational brochures to the general public.

The

brochures

explain what the Credit Registry of Kosovo is, how borrowers incorrect

can

dispute

information

contained in their credit reports, and how a good credit record will facilitate a Media clip from the Credit Registry upgrade public outreach campaign

person’s receiving a new

loan. Use of the CRK by credit providers and borrowers has grown rapidly over the life of the Project. For example, inquiries by banks and microfinance institutions about borrowers reached 923,542 in 2011, up 24% from the prior year, indicating a growing request for credit by both individuals and businesses. As to other possible users of the credit registry system, the CRK does not have the legal authority to collect credit information from, for example, utility companies. As the CBK does not regulate or monitor non-financial institutions, it has no interest in receiving credit information from such entities since it cannot ensure data accuracy. Inaccurate or non-current credit information would compromise the CRK’s data base and lead to errors, undermining its credibility. Study Visit to Italy with CBK Staff. To assist preparation of use of the new CRK software and to familiarize CBK officials with modern credit registry practice, USAID|BEEP sponsored a Study Tour visit to the Central Bank of Italy in June 2012. Through work with the CBK, USAID|BEEP made

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

56

several recommendations on reducing the number of errors that occur in updates to credit information through improved technical and operational improvements. This includes establishment of a transparent and effective data dispute procedure for citizen and business challenges to incorrect information. The Study Tour to Italy focused on trainings and real-world application examples that met these challenges head-on. The agenda included topics like “Ten Steps to Data Quality”, “Analyzing the Information Environment”, “Real-life Application on the Framework and Methodology”, and “Practical Software Test Automation.” Results of the tour were aimed to: 

Implement a framework for information quality;



Develop skills in analyzing the information environment and implementing controls;



Implement the framework and methodology for real-life application;



Test software automation and overcome problems; and



Improve data quality in the CRK.

Participants from the Credit Registry included the Head of the Credit Registry, the Analysis and Development Officer, and a Credit Registry Officer. The Study Tour was a significant contribution to the CRK’s ability to transition to the new software. Training and real-world application received were reported by CRK participants as crucial to their success in implementing the new software. Strengthening Central Bank supervisory capacity. To strengthen the capacity of the CBK as a regulator and supervisor of financial institutions, the Project recognized the importance of leveraging the credit registry upgrade so that better information and management reports could be generated. These reports, in turn, support and facilitate the CBK’s supervisory function and help ensure stability of the financial system. Examples of such reports would be those that monitor lending and concentration of risks, trends in loans, and classifications. An early review of needs in the CBK’s supervisory department and research and statistics department enabled the Project to identify additional data requirements for inclusion in the credit registry system. C3-3: SUPPORT FOR LEGAL, REGULATORY, AND INFORMATIONAL REFORM IN THE FINANCIAL SECTOR Regulation on the Credit Registry. To complement implementation of the new CRK software upgrade, USAID|BEEP worked with the CBK to develop a new Regulation on the Credit Registry that, among

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

57

other things, allows insurance companies access to the credit information system and requires that they report to the system and establishes new borrowers' rights protections. A number of important features of the new regulation include:  Establishment of data subject rights. Before the Project began, there were very few requests by businesses and citizens for their own credit reports. There were many reasons for this, including the lack of a clear dispute mechanism for incorrect credit information, credit reports were often difficult to obtain if the individual or business resided outside of Pristina, and credit reports contained unorganized and confusing information without explanation. To remedy these barriers, the new regulation sets out clear procedures for disputing credit information, provides an option to request and receive credit reports from financial institutions, and establishes improved protections for personal information.  Expansion of credit information collected. The new regulation also expands the amount of credit information that can be collected, while respecting all legal protections for personal information. Expanded credit information allows credit providers to more reliably assess risk, potentially leading to lower interest rates and higher volumes of loans through reduced risks to lending.  Improved data protections. Protection of a data subject’s personal information is a top priority when dealing with dissemination of credit information. With this in mind, the USAID|BEEP-sponsored regulation made it very clear when, to whom, and under what circumstances it is permissible to divulge

The new Regulation on the Credit Registry improves borrowers’ rights and complements the newly-upgraded Credit Registry software

credit information.  Expansion of the types of users of the credit information system. The new regulation expands the types of users of credit information, providing insurance companies access to the credit information system while leaving the door open for future additions. Insurance companies use credit information to determine more accurate risk for consumers, and they will contribute to the depth of the credit information system. Allowing insurance companies to access the credit information system is also expected to contribute to improved Kosovo performance in the “Getting Credit” indicator in the Doing Business Report 2013. Collaborating with a dedicated working group on this regulation, USAID|BEEP and the CBK finalized the draft in January. Anxious to move forward on transformational reform in this area, the Regulation was approved by the CBK’s Board of Governors in February 2012. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

58

The new Regulation on the Credit Registry is an important part of achieving Project Results 434 and 535. Aimed in part to establish an improved regulatory framework for incentivizing increased use of the credit information system, the new Regulation on the Credit Registry establishes new borrowers' rights that include protection of personal information, the right to block incorrect credit information, access to one free credit report per year, and the ability to request and obtain credit reports all over the country. Utilizing a country-wide credit media campaign (discussed above), USAID|BEEP was able to distribute crucial information on the new rights and procedures, and further discussed the importance of a good credit report for borrowing. This has proved to be a success in our collaborative effort with the CBK to incentivize increased use of the credit information system, increasing credit report requests. Regulation on Credit Classifications. The CBK convened a working group to review all of its regulations for harmonization with the new Law on Banks, Microfinance Institutions and Non-bank Financial Institutions36. USAID|BEEP helped bring these regulations into line with the new credit registry upgrade. Among these was the (previously known as) Regulation 9 on Credit Classifications, which governed the mandatory reporting times for banks to submit credit classification updates37. An issue identified by the Project was the significant gap of three (3)

USAID|BEEP undertook revision of the licensing manual to harmonize the manual with principles featured in the anticipated Law on the Permissive System

months in required credit classification reporting. Credit reports are updated monthly and so credit classification information was unreliable for risk assessment. USAID|BEEP recommended monthly credit classification reporting for improved data reliability. The CBK incorporated these recommendations into the updated Rule 7 on Credit Risk Management and submitted it to the CBK Executive Board who approved the Rule in September. CBK Licensing Manual revision. In February 2013 the Project began its review of the CBK Licensing Manual in order to bring it into line with the Laws on the Central Bank of Kosovo and on Banks, Microfinance Institutions and Non-bank Financial Institutions; with current CBK rules and regulations; with EU practice; and incorporating permissive system best practice. USAID|BEEP assisted the CBK to undertake a nearly complete restructuring and redrafting of the Licensing Manual, including through the addition of a number of important sections aimed to accomplish the above-mentioned goals. In March 2013, USAID|BEEP supported the CBK to complete this revision

34

The goal of Project Result 4 is aimed to increase the number of types of users of the credit information system to five is to increase the number of businesses and citizens that access their own credit reports. 35 Project Result 5 is to increase the number of businesses and citizens that access their own credit reports. 36 Law No. 04/L-093 on Banks, Microfinance Institutions and Non-bank Financial Institutions. 37 Now known as Rule 7 on Credit Risk Management. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

59

and submitted the new draft to the CBK Executive Board for approval. The CBK is expected to approve the manual after the Project's lifetime. Bills of Exchange and Negotiable Instruments. The Project supported the CBK to prepare comments and explanatory notes on the draft Laws on Negotiable Instruments and Bills of Exchange. These draft laws are aimed to facilitate commercial transactions through the use of instruments like checks, bills of exchange and promissory notes. After discussions with the CBK, they committed to establishing a working group to review and prepare the preliminary draft laws. These draft laws will be adopted after USAID|BEEP’s project lifetime.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

60

ANNEX 1: SUPPLEMENTAL REPORTING A. NUMBER OF TRAINING EVENTS AND PARTICIPANTS Event Tracking Table Date

Place

No. of Participa nts

BEEP Component

Gender M/F

Ethnicity

1. Trade Policy Working Group

11/30/20 10

Hotel Victory, Pristina

78

II

63 M, 15 F

68 K. Albanian, 10 Internationals

2. Joint Media Event (BEEP, SEAD, DEMI, KPEP)

12/21/20 10

Kaga Bar, Pristina

20

CrossComponent

15 M, 5 F

16 K. Albanians, 4 K. Serbs

3. Customs Valuations Training

1/11/201 11/13/201 1

Centrum Hotel, Prizren

32

II

30 M, 2 F

32 K. Albanians

4. Establishing Partnerships in BEEP

1/13/201 1

Hotel Victory, Pristina

38

I

29 M, 9F

38 K. Albanians

5. Establishing Partnerships in BEEP

1/14/201 1

Restaurant Jaffa, Mitrovica

28

I

23 M, 5 F

26 K. Albanians, 2 K. Serbs

6. Establishing Partnerships in BEEP

1/18/201 1

Centrum Hotel, Prizren

26

I

22 M, 4 F

24 K. Albanians, 2 K. Bosnians

7. Customs Valuations Training

1/18/201 11/20/201 1

Restaurant Univers, Peja

45

II

36 M, 9 F

45 K. Albanians

8. Establishing Partnerships in BEEP

1/20/201 1

Restaurant Ognjiste, Gracanica

20

I

17 M, 3 F

20 K. Serbs

9. Establishing Partnerships in BEEP

1/21/201 1

Hotel Bolero, Ferizaj

30

I

28 M, 2 F

30 K. Albanians

10. Customs Valuation Training

1/25/201 1-

Restaurant Jaffa,

27

II

25 M, 2 F

27 K. Albanians

Description

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

61

1/27/201 1

Mitrovica

11. Establishing Partnerships in BEEP

1/26/201 1

Carshia e Jupave, Gjakove

42

I

33 M, 9F

42 K. Albanians

12. Establishing Partnerships in BEEP

1/27/201 1

Restaurant Univers, Peja

48

I

42 M, 6 F

46 K. Albanians, 2 K. Bosnians

13. Customs Valuation Training

2/1/20112/3/2011

Hotel Victory, Pristina

50

II

44 M, 6 F

50 K. Albanians

14. First Struga Retreat (Macedonia)

2/6/20112/12/201 1

Hotel Dream, Struga

38

CrossComponent

35 M, 3 F

35 K. Albanians, 3 Internationals

15. Bansko Retreat (Bulgaria)

4/10/201 14/14/201 1

Hotel Kempinski, Bansko

54

CrossComponent

43 M, 11 F

40 K. Albanians, 14 Internationals

16. Establishing Partnerships in BEEP

4/13/201 1

Restaurant Kod Lipe, Strpce

16

I

15 M, 1 F

16 K. Serbs

17. Establishing Partnerships in BEEP

4/15/201 1

Hotel Kristal, Gjilan

22

I

17 M, 5 F

22 K. Albanians

18. DB Reforms Launch Event

4/28/201 1

Hotel Victory, Pristina

77

CrossComponent

64 M, 13 F

59 K. Albanians, 2 K. Serbs, 3 K. Turks, 13 Internationals

19. Credit Reporting Workshop

5/11/201 15/13/201 1

Emerald Hotel, Pristina

39

III

26 M, 13 F

35 K. Albanians, 4 Internationals

20. Second Struga Retreat (Macedonia)

6/7/20116/12/2011

Hotel Dream, Struga

38

CrossComponent

29 M, 9 F

33 K. Albanians, 5 Internationals

21. Credit Reporting Workshop

6/13/201 16/14/201 1

Hotel Victory, Pristina

58

III

39 M, 19 F

53 K. Albanians, 5 Internationals

22. MCI Launch Event 2011

12.07.20 11

Hotel Victory, Pristina

90

CrossComponent

73M / 17F

84 K. Albanians, 2 K. Serbs, 4 Internationals

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

62

23. MAS-Q Workshop I

27.07.20 11

IPAK

23

II

18M / 5F

22 K. Albanians, 2 K. Serbs, 1 International

24. MAS-Q Workshop II

05.08.20 11

IPAK

10

II

9M / 1F

10 K. Albanians

25. Georgia Study Tour

23.09.20 11

Tbilisi and Batumi

16

CrossComponent

14M / 2F

16 K. Albanians

26. CBK Memorandum of Understanding Signing

15.11.20 11

Central Bank of Kosovo

-

III

-

-

27. Technical Training on Trade Remedies

13.02.20 12

Hotel Afa, Pristina

28

II

19M / 9F

27 K. Albanians, 1 International

28. Technical Training on Antidumping

16.02.20 12

Hotel Afa, Pristina

28

II

19M/ 9F

27 K. Albanians, 1 International

29. Study Tour Istanbul for Islamic Finance Training

18.05.20 12

Istanbul

3

III

3F

2 K. Albanians, 1 K. Turk

30. Study Tour to Turkey for Best Construction Practices

06.06.20 12

Istanbul

20

I

15M / 5F

20 K. Albanians

31. Study Tour to Central Credit Registry of Italy

18.06.20 12

Rome

3

IIII

1M / 2F

3 K. Albanians

32. MCI Launch Event 2012

26.06.20 12

Hotel Emerald, Pristina

113

CrossComponent

83M/ 30F

91 K. Albanians, 14 K. Serbs, 8 Internationals

33. MCI 2012 Presentation in Peja

12.03.20 13

Univers Restauran t

58

CrossComponent

50 M, 8 F

17.10.20 12

Cacttus

13

III

10 M, 3 F

-

Municipal Building in Prizren

25

I

21 M, 4 F

-

KCC Building

26

I

24 M, 2 F

37. Permit Fees Meeting with MESP

-

MESP Building

10

I

4 M, 6 F

38. Permit Fees Meeting in Mitrovica

07.12.20 12

27

I

24 M, 3 F

34. Oracle Training 35. Construction Workshop Prizren 36. Permit Fees Meeting at KCC with Mabetex

58 K. Albanians 13 K. Albanians

23 K. Albanians, 1 K. Turk, 1 International

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

23 K. Albanians, 3 Internationals 10 K. Albanians 26 K. Albanians, 1 International

63

39. Permit Fees Meeting in Gjilan

03.12.20 12

40. Permit Fees Meeting in Peja

26.11.20 12

41. Permit Fees Meeting in Prishitna

05.12.20 12

42. Permit Fees Meeting in Prizren

10.12.20 12

43. Construction Meeting with UNDP

14.03.20 13

20.03.20 13

44. Construction Meeting with UNDP

38

I

33 M, 5 F

Hotel Dukagjini

23

I

16 M, 7 F

Hotel Prishtina

31

I

20 M, 11 F

26

I

24 M, 2 F

Municipal Building in Fushe Kosove

17

I

7 M, 10 F

Municipal Building in Fushe Kosove

15

21 K. Albanians, 2 Internationals 28 K. Albanians, 1 K. Serb, 2 Internationals 23 K. Albanians, 3 Internationals

14 K. Albanians, 1 K. Serb, 2 Internationals I

7 M, 8 F 13 K. Albanians, 1 K. Serb, 1 International

45. Construction Law Reforms in Prizren

21.03.20 13

Restauran t Marash

62

I

55 M, 7 F

46. Construction Law Reforms in Prishtina

11.04.20 13

Hotel Prishtina

74

I

66 M, 8 F

47. Construction Law Reforms in Gjilan

10.04.20 13

Restauran t Bujana

40

I

37 M, 3 F

48. Construction Law Reforms in Ferizaj

02.04.20 13

Restauran t Orchide

34

I

30 M, 4 F

28.03.20 13

Restauran t Carshia e Jupave

40

I

30 M, 10 F

50. Construction Law Reforms in Peja

04.04.20 13

Restauran t Univers, Peja

39

51. Construction Law Reforms in Mitrovica

19.03.20 13

Hotel Palace

42

I

38 M, 4 F

52. Construction Law Reforms in Gracanica

29.03.20 13

Hotel Emerald, Pristina

19

I

10 M, 9 F

53. International Trade Guide

04.03.20 13

Hotel Emerald,

61

II

52 M, 9 F

49. Construction Law Reforms in Gjakova

33 K. Albanians, 4 K. Serbs, 1 International

58 K. Albanians, 3 K. Turks, 1 International 70 K. Albanians, 4 Internationals 39 K. Albanians, 1 International 33 K. Albanians, 1 International

39 K. Albanians, 1 International I

36 M, 3 F 38 K. Albanians, 1 International

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

40 K. Albanians, 1 K. Serb, 1 International

7 K. Albanians, 11 K. Serbs, 1 International 59 K. Albanian, 2 K. Serb

64

Pristina

54. Legal Information Database

Totals

28.06.20 13

Governm ent Building, Rilindja

187

1

156 M, 31 F

170 K. Albanian, 2 K. Serb, 15 International

-

-

2,067

-

1679 M, 371 F

1,861 K. Albanian, 85 K. Serb, 109 International, 4 K. Bosnians, 8 K. Turks

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

65

B. MEDIA PRODUCTS CREATED, SUPPORTED, DISTRIBUTED Throughout the project, USAID|BEEP closely monitored activities which had media coverage on television, newspaper, radio, web news agencies, and through other sources. Project staff collected data

related

to

the

USAID|BEEP-specific

frequency

activities

in

of the

media. With 50 media products reaching out

through

media

outlets

including

television, radio, newspaper, and web news agencies, total potential media contacts were over 7.3 million (including repeat contacts). Media products included outreach such as construction

workshops,

outreach

on

launch

the

and

Municipal

Competitiveness Index, and outreach on the legal information database under Component

One;

customs

valuation

training and launch of the International Trade Guide under Component Two; and workshops on enhancing credit reporting and credit registry and outreach on the Credit Registry software under Component Three. Specific media appearances include an exclusive interview conducted with the Pristina Municipal Coordinator, Salvador Elmazi, on RTV21 where he presented USAID|BEEP project objectives and the importance of Doing Business reforms and their economic impact based on the Georgian example. The Component One Business Environment Reform Lead, Brian Kemple, was similarly interviewed on Radio KIM. Another way that USAID|BEEP is “getting the message out” about business environment reform is through the project’s Special Studies and Projects Fund. In June 2011, BEEP awarded a grant to R&B Consult, a local television production firm, to produce 32 television shows on business environment reform issues. Additionally, the project utilized other local production firms, including Koperativa, Entermedia, PR Solutions, Rrota, MDA, and Craft Communications to drive critical public outreach on Project initiatives, including on construction reform, the International Trade Guide, KSA Standards Management Information System, Municipal Competitiveness Index, municipal reform results, Kosovo performance in the Doing Business 2013 report, and the Credit Registry of Kosovo software upgrade and new online credit portal.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

66

Media Tracking Table Subject

Media

Channel Type

Date of Publication

Language

1. Trade Policy Working Group in Pristina

Blue Skye

National Radio

11/30/2010

Albanian, Serbian

2. Trade Policy Working Group in Pristina

Kosovo Info

Internet

11/30/2010

Albanian

3. Trade Policy Working Group in Pristina

KTV

National Television

11/30/2010

Albanian

4. Trade Policy Working Group in Pristina

Parajsa

Internet News Agency

11/30/2010

Albanian

TV Opinioni

Local Television

1/11/2011-1/13/2011

Albanian

TV Balkan

Local Television

1/11/2011-1/13/2011

Albanian

Lajam Newspaper

Daily Newspaper

1/12/2011

Albanian

8. Roundtable on Establishing Partnerships in BEEP in Pristina

Bota Sot Newspaper

Daily Newspaper

1/13/2011

Albanian

9. Roundtable on Establishing Partnerships in BEEP in Pristina

Bota Sot Online

Daily Newspaper Online

1/13/2011

Albanian

10. Roundtable on Establishing Partnerships in BEEP in Pristina

Epoka e Re Newspaper

Daily Newspaper

1/13/2011

Albanian

11. Roundtable on Establishing Partnerships in BEEP in Pristina

Express Newspaper

Daily Newspaper

1/13/2011

Albanian

12. Roundtable on Establishing Partnerships in BEEP in Pristina

Infopress Newspaper

Daily Newspaper

1/13/2011

Albanian

13. Roundtable on Establishing Partnerships in BEEP in Pristina

Koha Ditore Newspaper

Daily Newspaper

1/13/2011

Albanian

14. Roundtable on Establishing Partnerships in BEEP in Pristina

Koha Online

Daily Newspaper Online

1/13/2011

Albanian

5. Customs Valuation Training in Prizren 6. Customs Valuation Training in Prizren 7. Trade Policy Working Group in Pristina

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Approx. Audience (Kosovo population 2,000,000) Blue Skye represents approximately 5% of the total Radio share Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Kosovo Info KTV represents approximately 25% of the total TV share Average number of clicks on News Agency website is approximately 14,000; no figures available for Parajsa Local Television represents approximately 7% of the total TV share Local Television represents approximately 7% of the total TV share Lajam Newspaper represents approximately 3% of the total Newspaper share Bota Sot Newspaper represents approximately 4% of the total Newspaper share Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Bota Sot Online Epoka e Re Newspaper represents approximately 2% of the total Newspaper share Express Newspaper represents approximately 2% of the total Newspaper share Infopress Newspaper represents approximately 2% of the total Newspaper share Koha Ditore Newspaper represents approximately 18% of the total Newspaper share Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Koha Online 67

15. Roundtable on Establishing Partnerships in BEEP in Pristina

Kosova Sot Newspaper

Daily Newspaper

1/13/2011

Albanian

16. Roundtable on Establishing Partnerships in BEEP in Pristina

Lajam Newspaper

Daily Newspaper

1/13/2011

Albanian

17. Roundtable on Establishing Partnerships in BEEP in Pristina

Telegrafi

Internet News Agency

1/13/2011

Albanian

RTK

National Television

1/13/2011

Albanian, Serbian, Bosnian, Turkish

TV Syri

Local Television

1/13/2011

Albanian

RTV 21

National Television

1/13/2011

Albanian

Kosova Live

Internet News Agency

1/18/2011

Albanian

TV Opinioni

Local Television

1/18/2011

Albanian

TV Balkan

Local Television

1/18/2011

Albanian

24. Establishing Partnership in BEEP in Gracanica

Gracanica Municipality

Municipality Website

1/21/2011

Serbian

25. Customs Valuation Training in Mitrovica

Radio Ylberi

Local Radio

1/25/2011-1/27/2011

Albanian

18. Roundtable on Establishing Partnerships in BEEP in Pristina 19. Roundtable on Establishing Partnerships in BEEP in Pristina 20. Roundtable on Establishing Partnerships in BEEP in Pristina 21. Customs Valuation Training in Peja 22. Roundtable on Establishing Partnerships in BEEP in Prizren 23. Roundtable on Establishing Partnerships in BEEP in Prizren

26. Roundtable on Establishing Partnerships in BEEP in Gjakova

Gjakova Municipality

Municipality Website

1/26/2011

Albanian

27. Roundtable on Establishing Partnerships in BEEP in Gjakova

Kosova Live

Internet News Agency

1/26/2011

Albanian

RTK

National Television

1/26/2011

Albanian

TV Syri

Local Television

1/26/2011

Albanian

Radio Gjakova

Local Radio

1/26/2011

Albanian

Zeri Newspaper

Daily Newspaper

1/27/2011

Albanian

28. Roundtable on Establishing Partnerships in BEEP in Gjakova 29. Roundtable on Establishing Partnerships in BEEP in Gjakova 30. Roundtable on Establishing Partnerships in BEEP in Gjakova 31. Roundtable on Establishing Partnerships in BEEP in Peja

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Kosova Sot Newspaper represents approximately 14% of the total Newspaper share Lajam Newspaper represents approximately 3% of the total Newspaper share Average number of clicks on Telegrafi News Agency website is approximately 14,000 RTK represents approximately 28% of the total TV share Local Television represents approximately 25% of the total TV share RTV 21 represents approximately 25% the total TV share Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Kosova Live Local Television represents approximately 7% of the total TV share Local Television represents approximately 7% of the total TV share Average number of clicks on News Agency website is approximately 14,000; no exact figures for Municipality Website No data available Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Municipality Website Average number of clicks on News Agency website is approximately 14,000; no exact figures available for Kosova Live RTK represents approximately 28% of the total TV share Local Television represents approximately 7% of the total TV share Radio Gjakova represents approximately 2% of the total Radio share Zeri Newspaper represents approximately 3% of the total Newspaper share 68

32. Roundtable on Establishing Partnerships in BEEP in Peja 33. Interview of Component One Lead

Radio Dukagjini

Local Radio

1/27/2011

Albanian

Radio KIM Website

Local Radio Website

3/18/2011

Serbian

34. Interview of Component One Lead

Radio KIM

Local Radio

3/20/2011

Serbian

UBT University

University

3/31/2011

Albanian

RTK

National Television

6/13/2011

Albanian

RTK represents approximately 28% of the total TV share

Radio Rinia

Local Radio

7/12/2011

Albanian

Radio Rinia represents approximately 1% of the total Radio share

Yili Info

Internet News Agency

7/12/2011

Albanian

Average number of clicks on News Agency websites is approximately 14,000; no exact figures available for Yili Ingo

RTV 21 Online

National Television Website

7/12/2011

Albanian

RTV 21 represents approximately 25% of the total TV share

Telegrafi

Internet News Agency

7/12/2011

Albanian

Infoglob

Internet News Agency

7/12/2011

Albanian

Ekonomia KS

Internet News Agency

7/12/2011

Albanian

Hani i Elezit Municipality

Municipality Website

7/12/2011

Albanian

KTV Online

National Television Website

7/12/2011

Albanian

Koha Ditore Newspaper

Daily Newspaper

7/13/2011

Albanian

Kosovo Sot Newspaper

Daily Newspaper

7/13/2011

Albanian

35. Component Two WTO Membership Presentation at UBT University 36. Component Three Workshop on Enhancing Credit Information and Credit Registry 37. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 38. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 39. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 40. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 41. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 42. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 43. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 44. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 45. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 46. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Radio Dukagjini represents approximately 16% of the total Radio share No data available Radio KIM represents approximately 11% of the total Radio share Average number of clicks on News Agency website is approximately 14,000; no exact figures for Municipality website available

Average number of clicks on Telegrafi News Agency website is approximately 14,000 Average number of clicks on News Agency website is approximately 14,000; no exact figured available for Infoglob Average number of clicks on News Agency website is approximately 14,000; no exact figured available for Ekonomia KS Average number of clicks on News Agency website is approximately 14,000; no exact figured available for Hani i Elizit KTV represents approximately 25% of the total TV share Koha Ditore Newspaper represents approximately 18% of the total Newspaper share Kosovo Sot Newspaper represents approximately 15% of the total Newspaper share 69

47. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 48. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 49. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 50. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 51. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation 52. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Viti 53. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Prizren 54. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Rahovec 55. USAID|BEEP and Fulbright Researcher Ally to Facilitate Comprehensive Permissive System Reform in Kosovo 56. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Prishtina 57. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Prishtina 58. Municipal Competitiveness Index (MCI) Diagnostics Presentation in the municipality of Prishtina 59. Municipal Competitiveness Index (MCI) Diagnostics Presentation and meeting with businesses in the municipality of Viti 60. Interview of Component 1 Lead

Epoka e Re Newspaper represents approximately 2% of the total Newspaper share Infopress Newspaper represents approximately 2% of the total Newspaper share Lajm Newspaper represents approximately 3% of the total Newspaper share Kosova Sot Newspaper represents approximately 15% of total Newspaper share Radio Rinia represents 1. 21% out of 5% total Radio share (approx. audience 20,000)

Epoka e Re Newspaper

Daily Newspaper

7/13/2011

Albanian

Infopress Newspaper

Daily Newspaper

7/13/2011

Albanian

Lajm Newspaper

Daily Newspaper

7/13/2011

Albanian

Kosova Sot Newspaper

Daily Newspaper

7/14/2011

Albanian

Radio Rinia

Local Radio

15.07.2011

Albanian

Vitia Municipality Web

Municipality Website

04.10.2011

Albanian

No exact data on the number of clicks is available.

Koha Ditore Newspaper

Daily Newspaper

12.10.2011

Albanian

Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280)

Rahovec Municipality Web

Municipality Website

14.10.2011

Albanian

No exact data on the number of clicks is available.

American Embassy Facebook Page

American Embassy in Kosovo

26.10.2011

English

American Embassy Facebook Page has 14, 163 users (likes)

Kosovo Info

Internet News Agency

27.10.2011

Albanian

Koha Ditore Newspaper

Daily Newspaper

27.10.2011

Albanian

Zeri Newspaper

Daily Newspaper

27.10.2011

Albanian

Vitia Municipality Web

Municipality Website

11.11.2011

Albanian

No exact data on the number of clicks is available.

KTV

National Television

15.11.2011

Albanian

KTV represents 25. 75% out of 86% total TV share (approx. audience 442,900 )

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Average number of clicks on News Agency website is 14,000; there are no exact figures for Kosovo Info Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280)

70

Kosova Sot Newspaper

Daily Newspaper

16.11.2011

Albanian

Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280)

Zeri Newspaper

Daily Newspaper

15.12.2011

Albanian

Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280)

Kosova Sot Newspaper

Daily Newspaper

15.12.2011

Albanian

Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280)

64. Introducing digital public procurement system (e-procurement)

Zeri Newspaper

Daily Newspaper

26.01.2012

Albanian

65. Introducing digital public procurement system (e-procurement)

Koha Ditore Newspaper

Daily Newspaper

26.01.2012

Albanian

Bota Sot Newspaper

Daily Newspaper

27.04.2012

Albanian

RTK

National Television

26.06.2012

Albanian, Serbian, Bosnian, Turkish

Radio Rinia

Local Radio

15.07.2011

Albanian

69. Business Registry Office in FusheKosove

Kosova Sot Newspaper

Daily Newspaper

19.10.2012

Albanian

70. Doing Business 2013

Koha Ditore Newspaper

Daily Newspaper

25.10.2012

Albanian

71. Doing Business 2013

Kosova Sot Newspaper

Daily Newspaper

25.10.2012

Albanian

72. Doing Business 2013

RTK

National Television

24.10.2012

Albanian, Serbian, Bosnian, Turkish

73. Municipal Competitiveness Reforms

Koha Ditore Newspaper

Daily Newspaper

31.10.2012

Albanian

74. Credit Registry

Epoka e Re

Daily Newspaper

7.12.2012

Albanian

61. USAID and CBK signing of the MoU 62. Municipal Competitiveness Index (MCI) Diagnostics Presentation and meeting with businesses in the municipality of Prishtina 63. Municipal Competitiveness Index (MCI) Diagnostics Presentation and meeting with businesses in the municipality of Prishtina

66. Viti Municipality improves the business environment 67. Municipal Competitiveness Index 2012 - "Morning News Guest" 68. Municipal Competitiveness Index (MCI) Launch Event and Awards Presentation

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Bota Sot Newspaper represents 4.12% out of 7% total Newspapers share (approx. audience 49,280) RTK represents 28% out of 86% total TV share (approx. audience 442,900 ) Radio Rinia represents 1. 21% out of 5% total Radio share (approx. audience 20,000) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) RTK represents 28% out of 86% total TV share (approx. audience 442,900 ) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Epoka e Re Newspaper represents 2.62%

71

Newspaper

75. Credit Registry

Kosova Sot Newspaper

Daily Newspaper

7.12.2012

Albanian

76. Credit Registry

Koha Ditore Newspaper

Daily Newspaper

7.12.2012

Albanian

77. Credit Registry

Bota Sot Newspaper

Daily Newspaper

7.12.2012

Albanian

78. Credit Registry

Zeri Newspaper

Daily Newspaper

7.12.2012

Albanian

79. Construction Law

Kosova Sot Newspaper

Daily Newspaper

14.12.2012

Albanian

80. Municipal Competitiveness Reforms

Kosova Sot Newspaper

Daily Newspaper

25.01.2013

Albanian

81. Municipal Competitiveness Reforms

Zeri Newspaper

Daily Newspaper

29.01.2013

Albanian

82. Municipal Competitiveness Reforms

Kosova Sot Newspaper

Daily Newspaper

29.01.2013

Albanian

83. Municipal Competitiveness Reforms

Koha Ditore Newspaper

Daily Newspaper

07.02.2013

Albanian

Lajm Newspaper

Daily Newspaper

05.03.2013

Albanian

Express Newspaper

Daily Newspaper

05.03.2013

Albanian

Bota Sot Newspaper

Daily Newspaper

05.03.2013

Albanian

84. International Trade Guide 85. International Trade Guide 86. International Trade Guide

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Bota Sot Newspaper represents 4.12% out of 7% total Newspapers share (approx. audience 49,280) Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Lajm Newspaper represents 3. 52% out of 7% total Newspapers share (approx. audience 49,280) Express Newspaper represents 2.84% out of 7% total Newspapers share (approx. audience 49,280) Bota Sot Newspaper represents 4.12% out of 7% total Newspapers share 72

87. International Trade Guide

Kosova Sot Newspaper

Daily Newspaper

05.03.2013

Albanian

88. International Trade Guide

Koha Ditore Newspaper

Daily Newspaper

05.03.2013

Albanian

89. International Trade Guide

Epoka e Re Newspaper

Daily Newspaper

05.03.2013

Albanian

Telegrafi

Internet News Agency

04.03.2013

Albanian

Koha Net

Internet News Agency

04.03.2013

Albanian

Express Newspaper

Daily Newspaper

21.03.2013

Albanian

Bota Sot Newspaper

Daily Newspaper

21.03.2013

Albanian

Kosova Sot Newspaper

Daily Newspaper

21.03.2013

Albanian

Lajm Newspaper

Daily Newspaper

21.03.2013

Albanian

Zeri Newspaper

Daily Newspaper

21.03.2013

Albanian

97. Construction Law

Kosova Sot Newspaper

Daily Newspaper

22.03.2013

Albanian

98. Construction Law

Koha Ditore Newspaper

Daily Newspaper

27.03.2013

Albanian

99. Construction Law Reforms

Kosova Sot Newspaper

Daily Newspaper

12.04.2013

Albanian

90. International Trade Guide 91. International Trade Guide 92. The Importance of Local Governments in Investment Promotion and Business Retention Expansion 93. The Importance of Local Governments in Investment Promotion and Business Retention Expansion 94. The Importance of Local Governments in Investment Promotion and Business Retention Expansion 95. The Importance of Local Governments in Investment Promotion and Business Retention 96. Expansion The Importance of Local Governments in Investment Promotion and Business Retention Expansion

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

(approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Epoka e Re Newspaper represents 2.62% out of 7% total Newspapers share (approx. audience 49,280) Average number of clicks on Telegrafi News Agency website is 14,000. Average number of clicks on Telegrafi News Agency website is 14,000. Express Newspaper represents 2.84% out of 7% total Newspapers share (approx. audience 49,280) Bota Sot Newspaper represents 4.12% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Lajm Newspaper represents 3. 52% out of 7% total Newspapers share (approx. audience 49,280) Zeri Newspaper represents 3.59% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share 73

100. Construction Law Reforms

Kosova Sot Newspaper

Daily Newspaper

15.04.2013

Albanian

101. Construction Law Reforms

KTV

National Television

15.04.2013

Albanian

102. Construction Law Reforms

Koha Net

Daily Newspaper

15.04.2013

Albanian

103. Construction Law Reforms

Epoka e Re Newspaper

Daily Newspaper

29.04.2013

Albanian

104. Construction Law Reforms

Bota Sot

Daily Newspaper

29.04.2013

Albanian

105. Construction Law Reforms

Lajm Newspaper

Daily Newspaper

29.04.2013

Albanian

106. Construction Law Reforms

Koha Ditore Newspaper

Daily Newspaper

08.05.2013

Albanian

107. Business Registry Office in FusheKosove

Kosova Sot Newspaper

Daily Newspaper

19.10.2012

Albanian

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

(approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280) KTV represents 25. 75% out of 86% total TV share (approx. audience 442,900 ) Average number of clicks on Telegrafi News Agency website is 14,000. Epoka e Re Newspaper represents 2.62% out of 7% total Newspapers share (approx. audience 49,280) Bota Sot Newspaper represents 4.12% out of 7% total Newspapers share (approx. audience 49,280) Lajm Newspaper represents 3. 52% out of 7% total Newspapers share (approx. audience 49,280) Koha Ditore Newspaper represents 18.19% out of 7% total Newspapers share (approx. audience 49,280) Kosova Sot Newspaper represents 14.82% out of 7% total Newspapers share (approx. audience 49,280)

74

C. NUMBER OF MUNICIPALITIES RECEIVING BEEP ASSISTANCE WITH REGULATORY/ADMINISTRATIVE SIMPLIFICATION USAID|BEEP has Municipal Coordinators providing tailored support in both the Project’s eight (8) core municipalities and in all remaining municipalities. Those municipalities receiving USAID|BEEP assistance with regulatory/administrative simplification are provided below. Core municipalities:Prishtina/Pristina       

Gjakova/Djakovica Ferizaj/Urosevac Mitrovice/Mitrovica Peja/Pec Strpce/Shterpce Gracanica/Gracanice Prizren

Additional Municipalities:        

Viti Junik Rahovec Deçan Hani i Elezit Drenas Dragash Shtime

       

Vushtrri Novobrde Gjilan Kaqanik Klina Obiliq Suhareka Kamenica

D. NUMBER OF CUSTOMS HARMONIZATION PROCEDURES IMPLEMENTED IN ACCORDANCE WITH INTERNATIONALLY ACCEPTED STANDARDS AS A RESULT OF BEEP ASSISTANCE Improved process for goods declaration. In order to improve regional customs harmonization, USAID|BEEP recommended that Kosovo enter regional agreements that smooth the process for declaration of goods. In 2011, based on our recommendations, Kosovo Customs signed agreements with Albania and Macedonia to obtain automated reports when goods enter the territories of those countries. This result supports the World Customs Organization (WCO) International Convention on the Simplification and Harmonization of Customs Procedures (a.k.a. Kyoto Convention) under “Goods Declaration” at Standard 3.11 which states, “For automated Customs clearance processes, the format of the electronically lodged Goods declaration shall be based on international standards for electronic information exchange as prescribed in the Customs Co-operation Council Recommendations on information technology.” Recommendations on information technology begin

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

at Chapter 7 of the WCO convention on “Application of Information Technology” (see below), and those recommendations were followed. Also within Standards 3.11, 7.1, and 7.4 of the WCO Convention mentioned above is the use of Radio Frequency Identification (RFID) devices at Customs. USAID|BEEP recommended that Customs utilize RFID devices to simplify and streamline goods declaration procedures. These devices are used for Customs control on transit containers and reduce the need to physically inspect goods. Improved process for application of Information Technology. The abovementioned agreements and use of RFID devices provide for improved electronic commerce methods and harmonize Customs procedures regionally. These also serve as process improvements for application of information technology. Improved process for customs valuation. As a member of the Central European Free Trade Agreement, Kosovo is required to follow certain Customs valuation methodologies. However, USAID|BEEP identified that in practice these methods were confused and misapplied. In 2011, a BEEP STTA delivered Customs Valuation training to over 170 Customs representatives. The scope of these trainings included discussions on varying Customs Valuations Methods, including the Transaction Value Method (discussed in the World Trade Organization Valuation Agreement); the Identical Goods; Similar Goods; Deductive Value; Computed Value; and Residual (or Fall Back) Methods. These methods are required by the CEFTA, which at Article 32 states, “The provisions of this Chapter shall determine the customs value for the purposes of applying the Customs Tariff of Kosovo and non-tariff measures laid down by Kosovo provisions governing specific fields relating to trade in goods.” This training helped build the capacities of Kosovo Customs to harmonize customs valuation methods. Reduced number of documents required for goods declaration. Supporting efforts to reduce barriers to trade, rationalize the regulatory system, and harmonize customs procedures with international best practice, we made recommendations to Kosovo Customs to reduce the number of documents required for import and export to only those necessary to facilitate proper control of imported and exported goods. Embracing these recommendations, the Director General of Customs issued an internal Administrative Instruction reducing the number of documents required for export from 8 to 2 and for import from 8 to 3. Pursuant to the Convention on the Simplification and Harmonization of Customs Procedures, Standard 3.16 on Documents support Goods Declaration, “In support of the Goods declaration the Customs shall require only those documents necessary to permit control of operation and to ensure

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

that all requirements relating to application of the Customs law have been complied with.” The reform falls squarely within this Standard envisioned by the Convention.

E. NUMBER OF LEGAL, REGULATORY, OR INSTITUTIONAL ACTIONS (NOT CAPTURED IN D) TAKEN TO IMPROVE IMPLEMENTATION OR COMPLIANCE WITH INTERNATIONAL TRADE AND INVESTMENT AGREEMENTS DUE TO SUPPORT FROM BEEP Action

Type

Adoption of Law on Safeguard Measures on Imports

Legal

Adoption of Law Amending and Supplemental the Customs and Excise Code of Kosovo

Legal

Adoption of Law on External Trade

Legal

Kosovo undertook several important legal actions with Project assistance to facilitate trade and improve compliance with international trade agreements. First, adoption of the Law on Safeguard Measures on Imports38 represents the legal basis for invoking one of three internationally recognized trade contingency measures by the World Trade Organization. The GoK must still adopt implementing regulations and standard operating procedures to legally invoke these measures. Next, the recently adopted amendment to the Law on the Kosovo Customs Code39 is based on many important provisions contained in the European Union Model Customs Code of 2008 for the facilitation of trade in Kosovo. Finally, adoption of the project-sponsored Law on External Trade adopts several WTO and EU principles and practices for transparency and international rules related to Kosovo’s external trade.

38 39

Law No. 04/L-047 on Safeguard Measures on Imports. Law No. 04/L-099 on Amending and Supplementing the Customs and Excise Code in Kosovo No. 03/L-109.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

F. PROGRESS ON USAID EG POLICY/REGULATORY INDEX Progress on the policy/regulatory index illustrates milestones of progress towards passage and implementation of key policies and regulations that will positively affect the enabling environment growth in Kosovo40. The Kosovo Parliament adopted several Doing Business- and non-Doing Business-related laws that have had, and are expected to have dramatic economic impacts and significantly improve Doing Business performance. WORKSHEET: THE POLICY/ REGULATORY REFORM INDEX

Key Law

Law No. 04/L-0006 on Amending and Supplementing of the Law No. 02/L-123 on Business Organizations Law No. 04/L-005 on Amending and Supplementing the Law No. 2004/18 on Internal Trade Law No. 04/L-002 on Amending and Supplementing the Law No. 03/L-010 on Notary Law No. 04/L-014 on Accounting, Financial Reporting and Audit Law No. 04/L-009 on Amending and Supplementing the Law No. 2002/5 on the Establishment of the Immovable Property Rights Register Law No. 04/L-013 on Cadastre Law No. 04/L-012 on Fire Protection Law No. 04/L-047 on Safeguard Measures on Imports Law No. 04/L-048 on External Trade Law No. 04/L-009 on Amending and Supplementing Customs and Excise Code of Kosovo No. 03/L-109 Law No. 04/L-100 on Amending and Supplementing Law No. 03/L-204 on Tax of Immovable Property Law No. 04/L-110 on Construction Total Points

40

Issues are identified as important to address by the target institution 1 point

Policy or Law is drafted

X

X

X

Policy or Law is vetted with the public and/or affected stakeholders 1 point

Policy or Law is applied on a regular basis (law has become institutionalized)

1 point

Policy or Law is applied (at least one example of application can be demonstrated) 1 point

X

X

X

X

6

X

X

X

X

X

6

X

X

X

X

X

X

6

X

X

X

X

X

X

6

X

X

X

X

X

X X

X X

X X

X X

X X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X 12

X 12

X 12

X 12

X 10

See USAID EG PMP at Intermediate Result No. 1.1.2

1 point

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Policy or Law is approved/ adopted

Points

Comments

1 point

5

X

5 6 4

X

5 4 4 4

4 63

78

G. PERCENT INCREASE IN VALUE OF LOANS41 Over the life of the Project, the value of loans saw a 29.9% increase. Millions

Year

Quarter

Month

Outstanding amounts (millions of EUR)

2009

Q4 - 2009

Dec

1,289.00

Jan

1,292.70

Q1 - 2010

2010 Q2 - 2010

Q3 - 2010

41 42

Feb

1,297.50

Mar

1,336.20

Apr

1,359.90

May

1,380.80

Jun

1,404.60

Jul

1,413.10

G. % Loan Value Increase42

3.66%

5.12%

Information derived from the Central Bank of Kosovo at http://www.bqk-kos.org/repository/docs/time_series/07%20Other%20Depository%20Corporations%20Balance%20Sheet.xls Percentage increase in loan value is calculated by comparing outstanding amounts at the end of the quarter to outstanding amount in the previous quarter.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

79

Q4 - 2010

Q1 - 2011

2011

Q2 - 2011

Q3 - 2011

Q4 - 2011

Q1 - 2012

Q2 - 2012 2012 Q3 – 2012

Q4 - 2012

2013

Q1 - 2013 Q2 - 2013

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Aug

1,406.80

Sep

1,418.60

Oct

1,428.10

Nov

1,452.60

Dec

1,458.70

Jan

1,460.20

Feb

1,484.00

Mar

1,513.20

Apr

1,541.04

May

1,599.90

Jun

1,624.90

Jul

1,629.10

Aug

1,630.90

Sep

1,656.30

Oct

1,678.80

Nov

1,686.20

Dec

1,698.10

Jan

1,683.10

Feb

1,692.20

Mar

1,717.10

Apr

1,740.8

May

1,755.3

Jun

1,776.3

Jul

1,767.1

Aug

1,753.8

Sep

1,758.7

Oct

1,748.4

Nov

1,758.8

Dec

1,763.4

Jan

1,754.9

Feb

1,765.6

Mar

1,782.7

Apr

1,801.6

1.00%

2.83%

3.73%

7.38%

1.94%

2.52%

1.12%

3.44%

-0.99%

0.27%

1.09%

80

1,810.0

May Jun43

H. NUMBER OF SUCCESSFUL CREDIT TRANSACTIONS44 4th Quarter 2010 Successful Credit Transactions45

1st Quarter 2011

4th Quarter 2011

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

15,183

14,545

14,788

11,896

13,934

19,105

18,538

19,613

17,836

17,840

15,497

17,291

18,799

18,709

20,219

1st Quarter 2012 Successful Credit Transactions

3rd Quarter 2011

2nd Quarter 2011

2nd Quarter 2012

4th Quarter 2012

3rd Quarter 2012

1st Quarter 2013

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

13,000

13,468

19,136

18,851

17,130

16,258

14,931

11,731

13,123

14,489

15,162

15,508

12,659

14,542

18,569

2nd Quarter 2013 Successful Credit Transactions

Apr

May

Jun

17,216

16,950

15,148

I. AVERAGE INTEREST RATE SPREAD BETWEEN RATE PAID ON DEPOSITS AND INTEREST RATE EARNED FROM LOANS46 2009

2010

2011

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Deposit Rate

4.0

4.1

3.8

3.6

3.5

3.4

3.7

3.8

3.9

3.7

3.6

3.8

3.4

3.4

3.3

3.4

3.5

3.4

3.5

3.6

3.6

3.5

3.3

3.8

3.6

Loan Rate

14.1

13.4

14.6

14.3

15.3

14.6

14

14.9

15.2

15.5

15.1

14.3

14.3

15.4

14.4

14.2

14.4

13.2

14.1

14.3

14.0

14.2

13.9

13.6

13.9

Interest Rate Spread

10.1

9.3

10.9

10.7

11.7

11.2

10.2

11.1

11.3

11.8

11.5

10.6

10.9

12

11.1

10.8

10.9

9.8

10.6

10.7

10.4

10.7

10.7

9.9

10.2

43

This data has not been officially published due to the time lag of data reporting from the CBK. Supplemental Indicator H information derived from the Credit Registry of Kosovo. 45 Successful credit transactions are defined as all new credit facilities per month. 46 Average interest rate spread is an indicator of gross profitability in the financial sector. Supplemental Indicator I information derived from the Central Bank of Kosovo at http://www.bqkkos.org/repository/docs/time_series/13%20ODC%20effective%20interest%20rates.xls. 44

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

81

2012

47

2013

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Deposit Rate

3.1

3.4

3.3

3.6

3.5

3.6

3.4

3.9

3.7

3.7

3.7

3.7

3.6

3.6

3.5

3.4

3.5

Loan Rate

14.5

13.3

13.8

13.5

13.4

13.5

13.1

13.4

13.8

13.2

12.7

12.9

13.6

13.5

12.6

12.6

12.3

Interest Rate Spread

11.4

9.9

10.5

9.8

9.9

9.9

9.6

9.4

10.1

9.5

9.0

9.1

9.9

9.8

9.1

9.2

8.7

This data has not been officially published due to the time lag of data reporting from the CBK.

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Jun47

82

ANNEX 2: ECONOMIC IMPACTS OF REFORMS (PR2) The total impact of USAID|BEEP activities is estimated to exceed $195 million ($136.4 mm non-trade, $58.7 mm trade) in total economic benefit as detailed in this Economic Impact Summary Supplement. Estimated economic impact is provided to give additional depth to the connection of legal, regulatory and operational changes to economic growth in Kosovo. It supplements other measures such as Doing Business and MCI improvement or output-capturing measures of project performance. It doesn’t stand alone, but is an additional element of the broader reform picture. The economic impact methodology utilized by USAID|BEEP is based on the Standard Cost Model and International Finance Corporation's Compliance Cost Model. INTERNATIONAL METHODOLOGIES The Standard Cost Model and Compliance Cost Model attempt to capture the total economic burden of regulation on businesses and the benefit when regulation is reformed. According to the World Bank Group, Investment Climate Advisory Services “over the last few years the Standard Cost Model (SCM) has become the regulatory reform tool of choice in EU and OECD countries for identifying and reducing regulatory compliance costs. SCM provides a relatively simple methodology to measure and communicate businesses’ paperwork obligations arising from compliance with governments’ regulations. More recently the SCM has also been adapted and applied in a number of developing countries, including Kenya, Zambia, Vietnam, Burkina Faso and Rwanda.48” According to the World Bank, “as part of a broader reform package the SCM has proven capable of strengthening momentum by providing new insights into regulatory obligations, by quantifying the costs and time associated with information obligations both at aggregate and at a rule-specific level. It has hence proven useful both as a tool to target specific interventions and to monitor the impact of reform.49” The Compliance Cost Model builds “on methodologies developed by the Ministry of Finance of the Netherlands, the European Commission, as well as the U.S. Small Business Administration and Office of Management and Budget.50” The models summarize both direct and indirect costs of economic activity. Direct Costs: The direct impact on the economic costs (e.g., administrative costs, including official and unofficial payments and labor costs) realized by an enterprise resulting from the reform of a regulatory procedure, calculated at the firm level, the sector level, or for the SME sector as a whole. Direct costs are calculated by multiplying the following:

48

The World Bank, . Here is Your Money: Using the Standard Cost Model to Measure Regulatory Compliance Costs in Developing Countries . The World Bank Group: 2010. Print. . 49 Idem. 50 International Finance Corporation, . “SHOW ME THE MONEY!” QUANTIFYING THE IMPACT OF REGULATORY SIMPLIFICATION PROJECTS. International Finance Corporation, 2007. USAID Business Enabling Environment Program Final Report July 2010 – July 2013



Number of times the given procedure (e.g., licensing) is undertaken by a representative firm on a yearly basis (data publicly available)



Individual cost of each procedure including official payments and unofficial payments (data collected from official sources and through SME surveys)



Cost of employees directly dedicated to administrative procedures and the daily average employee salary (data collected through SME surveys)



Cost of procured services necessary to comply with administrative procedures, including for information gathering and document preparation (e.g., outside lawyers, accountants, etc.)

Indirect (opportunity) Costs: Impact on revenues or costs, due to alternative uses of time formerly dedicated to administrative procedures (e.g., delayed entry and temporary closure of business). We calculate the delay of entry (in the case of procedures such as business registration, licensing, permits, and other entry controls) using the following: 

Average annual net profit for start-up companies using averages for different sectors (data publicly available)



Average time spent in each administrative procedure (data collected through SME surveys)



Average number of working days per year in the economy/sector (data publicly available)



Costs related to the temporary closure of a firm’s activity are calculated using the following: o

Average annual losses for an active company whose activity is stopped but which retains its production factors

o

Average time a company’s activity is stopped due to the given procedures (data collected through SME surveys)

USAID|BEEP APPLICATION OF INTERNATIONAL METHODOLOGIES Economic impacts are calculated and validated through business interactions using interviews, focus groups, and tailored economic impact surveys. Official statistics are used where possible and existing in Kosovo. For example, the number of active businesses is taken from data from the Tax Administration of Kosovo and the number of new business registrations is taken from the Kosovo Business Registration Agency51. However, statistical data in Kosovo is often inconsistent across official sources, out of date, or unavailable. While efforts are underway by the Government to strengthen and harmonize official statistics, other first-hand selfreporting is often required to obtain information. Data on business time requirements is drawn from firsthand business interviews, surveys and field research. 51

TAK data provides a more reliable source for determining the number of active businesses because the KBRA is not responsible for tracking which businesses are active. KBRA data, however, is more reliable for determining new business registrations. USAID Business Enabling Environment Program Final Report July 2010 – July 2013

Calculations are forward-looking, estimating the impact for the next year. Conservative assumptions are used such as capturing only annualized economic benefits that excludes attempts to calculate net present value of reforms from multi-year impacts or growth rates that exceed current business levels. Additionally, derivative costs and benefits are excluded in simplified calculations such as intra-governmental operational implementation costs and positive impact benefits to tax collection, increased spending and employment. TOTAL ESTIMATED USAID|BEEP ECONOMIC IMPACT The total impact of USAID|BEEP activities is estimated to exceed $195 million ($136.4 mm non-trade, $58.7 mm trade) in total economic benefit:

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

ANNEX 3: MUNICIPAL COMPETITIVENESS INDEX PERFORMANCE (PR3) Time Costs

Change Compared to 2011

Taxes and Fees

Change Compared to 2011

Municipal Administration

Change Compared to 2011

Labor Business Support Services

Change Compared to 2011

Municipal Infrastructure

Change Compared to 2011

Average Municipal Improvement

Change Compared to 2011

Participation and Predictability

Change Compared to 2011

Transparency

Change Compared to 2011

Barriers to Business Entry

Decan 6.2 11.29% 5.9 25.42% 2.1 -4.76% 2011 2012 7.2 4.9 2.3 2013 6.9 7.4 2 Dragash 5.3 22.64% 5.3 32.08% 2.5 -4.00% 2011 2012 5.6 4.8 1.7 2013 6.5 7 2.4 Ferizaj 6.8 -2.94% 4.1 90.24% 1.5 80.00% 2011 2012 6.5 5.4 2.5 2013 6.6 7.8 2.7 Fushe Kosova 6.3 12.70% 3.7 145.95% 2.8 -53.57% 2011 2012 6.7 5.7 1.3 2013 7.1 9.1 1.3 Gjakova 6.9 24.64% 5.7 22.81% 2.1 4.76% 2011 2012 6 5 3.3 2013 8.6 7 2.2 Gjilan 6.2 9.68% 4.7 55.32% 2.9 6.90% 2012 6.4 5.3 2.4 2013 6.8 7.3 3.1 Gllogovc 5.8 -3.45% 5.1 52.94% 2 -20.00% 2011 2012 6.3 5.4 1.5 2013 5.6 7.8 1.6 Gracanica 7 20.00% 1.8 255.56% 1.1 54.55% 2011 2012 6 5.4 1.6 2013 8.4 6.4 1.7 Hani i Elezit 5.8 6.90% 5.8 34.48% 2.6 96.15% 2011 USAID Business Enabling Environment Program Final Report July 2010 – July 2013

6.2

-3.23%

6.9

-33.33%

6

5.00%

4.4

-2.27%

8.1

-13.58%

-1.93%

5.6 6 4.2

7.7 4.6 57.14%

5.1 6.6 4.8

58.33%

6.8

16.67%

7.9

6.7

3.4 7.2 4.5 4.9 5.3 4.7

-17.72%

6.2

17.78%

10.64%

6.8

6.3

5.4

-56.45%

3.8

-3.80%

-2.94%

5.3

6.3

17.27%

33.33%

8.1

-17.28%

30.30%

11.54%

17.26%

6.8 6.7 78.95%

5.2 3.9 5.8 6.3

19.05%

21.36%

-8.82%

6.5 6.2 6.7 5.4 5.3

-20.90%

6.6 7.5 8.6 7.7 7.3

-15.12%

4.30%

-24.53%

5

26.00%

4.8

22.92%

7.70%

78.43%

56.96%

25.68%

25.32%

5 6.3 -4.55%

4.6 4.2 7.94%

0.00%

37.78%

3.9 4 4.4

8.2 7.6 8.2

6.5 6.8

5.8 6.8 6.8 5.4 6.2

-1.45%

-5.66%

7.5 7.2

4.5

6.1 6.8 13.56%

-14.00%

-2.86%

8.3 6.6 6.9

5.3

8.3 7

4.8 5

2.7 2.7

9 8.8 7.9 7.5 7.6

-1.39%

9.23%

3.6 4.3

7

5.6 7.1 5.9

5

31.34%

5.1 5.2 7.2

14.71%

6.4 6.5 33.33%

6.5

6.1 4.3

6.1 7.1

7.8 7.8

5.4 6.3 5.4

26.76%

9.2 9

3.9 7.6 5.4

7.1

6.6 6.3

3.3

4.1 5.9 87.88%

5.9 6.2 55.56%

6.9

5.1 9 9.1

-37.68%

7.4

86

6.1 7.5 5.56%

8 5.7 6.4

32.81%

14.52%

-5.13%

6.6 6.6

137.14%

5.7

-1.52%

3.8

82.05%

7.9 3.6 6.6

1.3

2

22.81%

1.2

-15.38%

2.4

-25.00%

8

54.55%

4.3

3.9

33.33%

4.6

65.12%

6.2

128.21%

2.2 1.1

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

5.7 7 4.9

23.08%

6.6

8

-4.35%

6.5

-10.61%

8

-16.25%

8.7 7.3 6.2

5.1

4.4

4.1

-16.92%

5.4

-7.84%

6.5

-18.18%

9.2 6.1 2.9

4.8

5

5.6

7.32%

5.8

6.25%

5.2

6.00%

4.1

0.00%

3.2 4.6 9.5

42.34%

8

-7.50%

8.61%

5.3

28.30%

20.12%

5.8

-3.45%

23.63%

44.12%

26.35%

34.92%

7.51%

20.90%

22.08%

16.98%

-1.51%

6.2 5.6 -24.14%

3.4 4 4.9

26.92%

6.3 6.2 8.5

56.10%

6.3 6.4 -68.48%

44.64%

8.6 6.8

4.6 6.6 -24.62%

5.6

5.4 7.4

3.1 4.4 -31.48%

1.58%

8 8.1

3.7 5.6

5.6 4.9 -28.74%

82.14%

4.9 5.3

4.8 3.7 -33.75%

2.8

9.1 7.3 5.7

3.5 5.1

5.1 4.4

6.9 5.3 -14.04%

20.75%

6 3.6

7.7 5.4 1.61%

5.3

-44.05%

6.3 5.1

7.5 4.7

7 6.7

6.7 6.3 -86.25%

6.5

-5.88%

5.4 6.4

6.7 5.9

5.2 4.4 50.00%

1.45%

8.7 8

5.5 8.9

2.1 3.6 -16.46%

4.4

6.9

5.1

-37.36%

7.7 9.3

2 4.7

6.5 4.8

7.1 7

6.1 7.1

1.4 1.6 107.89%

18.18%

6.6 6.8

2.3 1.5

5.6 7.9 -12.00%

17.39%

1.2 1.1

4.5 7

7.3 6.5 7.5

3.9

2.3

4.4

15.09%

7.7 6.1

5.9 5.2

4 2.7

6.3 7.1

8 7.4 6.6

33.96%

5.5 8.3

5.9 7.1 7.8

3.5

166.67%

2.7 4.8

7.4 7.1

8.2 8.5 6.2

5.3

1.8

6.3 6.1

5.3

5.1 3.1

8.4

Average Municipal Improvement

5.4

44.23%

-3.17%

-41.51%

Change Compared to 2011

8.1 6.5

5.2

4.5 3

6.3

8.2 5.6

5.3

5.1 4.3

Municipal Infrastructure

-14.47%

66.67%

12.00%

Change Compared to 2011

4.2 9.9

1.8

3.9 7.1

5

7 9.8

Labor Business Support Services

7.6

67.80%

57.78%

Change Compared to 2011

6.9 8.4

5.9

1 1.1

4.5

8.5 6.8

Municipal Administration

71.43%

-31.25%

Change Compared to 2011

2.8 8.6

1.6

6.3 6.7

Taxes and Fees

4.9

59.26%

Change Compared to 2011

6.3 7.3

5.4

4.2 5.1

Time Costs

37.74%

Change Compared to 2011

7.7 7.8

Participation and Predictability

5.3

Change Compared to 2011

6.7 6.2

Transparency

Change Compared to 2011

Barriers to Business Entry

2012 2013 Istog 2011 2012 2013 Junik 2011 2012 2013 Kacanik 2011 2012 2013 Kamenica 2011 2012 2013 Klina 2011 2012 2013 Kllokot 2011 2012 2013 Lipjan 2011 2012 2013 Malisheva 2011 2012 2013 Mamushe 2011 2012 2013

6.7 7.6 8.1

196.88%

5.3 7.2 6.2

87

Barriers to Business Entry

Change Compared to 2011

Transparency

Change Compared to 2011

Participation and Predictability

Change Compared to 2011

Time Costs

Change Compared to 2011

Taxes and Fees

Change Compared to 2011

Municipal Administration

Change Compared to 2011

Labor Business Support Services

Change Compared to 2011

Municipal Infrastructure

Change Compared to 2011

Average Municipal Improvement

Mitrovica 2011 2012 2013 Novo Brdo 2011 2012 2013 Obiliq 2011 2012 2013 Peja 2011 2012 2013 Podujeva 2011 2012 2013 Pristina 2011 2012 2013 Prizren 2011 2012 2013 Rahovec 2011 2012 2013 Shterpce 2011 2012 2013 Shtimja 2011

6.8

1.47%

3.7

75.68%

1.7

29.41%

4.1

48.78%

7.9

-5.06%

6

-21.67%

3.4

52.94%

7.1

1.41%

22.87%

7.3 6.9 6.3

4.8 6.5 9.52%

6.4 6.9 4.1

5.7

5.4

6.4 6 6.3 6.1 6.4 5.1

1.59%

5.3 8.4 3.6 4.3 5.1

43.14%

4.7

-56.06%

41.67%

97.87%

1.1

-4.55%

6.1

11.11%

5.7 3.4

5.2

5.5

100.00%

9.09%

3.1

21.31%

1.9

-48.15%

1.3

1.7

96.88%

96.77%

7.8

-15.79%

5.6

-1.82%

6.6

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

4.4

10.61%

-17.95%

6.2

39.29%

5.1

-4.29%

8.2

31.37%

6.8

4.4

4.2

5.6

6.4 7

85.71%

6.7 4.4 2.7 5.7 6

122.22%

4.9 6.7 7.2 8.1 8.7

20.83%

59.94%

-53.23%

7.7

7.79%

7.8

-38.46%

18.13%

-4.84%

20.63%

-5.33%

2.11%

20.75%

11.42%

80.00%

29.65%

15.71%

21.64%

8.5 8.3 -13.33%

4.7

7.5 4.8 74.47%

4.7 8.2 -15.25%

3

-4.55%

5.7

136.67%

1.5

3.51%

5.3

5.3 6.4 6.4

93.33%

5.3 2.9 7.14%

7.5 6 7.1

6.2 5.9 -11.90%

6.2 5.2 5.9

4.8 7.1

5.6 3.7 26.47%

52.28%

33.66%

5.3 4.2 -4.88%

37.25%

39.58%

4.7 5

8.7 7.8 18.18%

5.9

5.1

4.8

4.9 3.9

7.9 6.7 16.67%

4.5

80.00%

51.72%

6.6 2.9 -7.35%

8 7.2

4.1 5.4

2.9 2.6 2.8 5.6 5.2

8 6.7

6.7 7.7 82.35%

7

3

2.9

7.7 6.3

5.1 7.8 46.15%

6.8

80.85%

-40.91%

7.2 6.4 1.64%

4.3 5.2

6.2 8.5

6.6 6.6 6.6 6.3 7.3

5.3 5.4

1.9 1.9 18.18%

5.5

4.7

4.4

5.6 6.2

1.5 1.6 42.31%

6.1

32.31%

8.20%

3.4 6.1 23.08%

5.5 4.7

9.1 8.6

6.3 6 3.2 4.1 6.3

1.5 1.4

4.4 7.4 3.17%

2.7

6.5

6.1

1.2 1.6

4.7 7.4 -24.44%

1.3

41.38%

39.53%

1.3 1.2 8.20%

8.3 7.5

5.2 8.2

2.2 2.2 1.2 1.9 2.4

4.4 7

7 6.3

6.3

6.3

5.8

4.3

5.6 6.6

6.9 2.9

4.5

6.1

93.10%

69.23%

4.2 9.3 -6.06%

5.3 6.1

4.7 5.6 1.3

6.5 6.2

6.6

2.9

55.56%

6.5 7.3

6.6

43.86%

6.3 8.2 46.34%

6.6

1.4 2.2

3.5 5.6 6.3

1.89%

7

88

32.14%

5.9

6.7 7.4 5.7

42.22%

1.8 3.3 2.1 2.3 1.9

25.42%

1.6

5.3 7.4 -15.79%

5.6 4.8

6.3

8.50%

Average Total Improvement Across for Municipalities

21.60%

Average Total Improvement Across BEEP 8 Primary Municipalities

29.60%

-9.52%

4.5 5.5 4.6 5.1 8.5

18.75%

3.4

2.3 1.9 9.52%

5.8 6.9

Improvement per Sub-indicator

7.7

1.3 1.2 1.2

55.97%

-11.69%

6.1

84.78%

7 6.8 7.2 7.9 8

41.18%

4.8

4.3 4.8 -7.69%

4.1

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

4.2

11.11%

4.3 3.7 5.2 5.3 5.6

29.17%

5.9

53.66%

6.4 7.8 6.8

32.35%

5.8

6.9

11.40%

6.5 7.5 8.2

-10.98%

8.81%

7.69%

7.2 6.8 2.8 2.6 4.6

64.29%

5.7 7.3 6.5 6.9 5.1

-21.54%

24.67%

-3.39%

2.5

152.00%

2.7

74.07%

46.17%

2.04%

5.74%

6.1 6.3 -43.10%

4.8 3.3 2.24%

28.00%

61.90%

6.4 5.7 6.25%

8.70%

7.8 8.1

6 6.4 -39.34%

6.6 6.2

4.7 6.3 24.13%

6.4 4.3

5

Average Municipal Improvement

18.33%

6.6 8.2 4.5 5.9 6.4

-9.84%

-33.85%

Change Compared to 2011

5.6

6.1

7.3 7.3

6.5

5.2 5.4

Municipal Infrastructure

7.4 4.8 6 6.4 7.1

43.48%

2.82%

Change Compared to 2011

2.3

4.5 4.5

7.1

6.7 6

Labor Business Support Services

38.98%

-6.25%

Change Compared to 2011

5.9

3.4 3.8

4.8

7.7 8.6

Municipal Administration

-2.04%

26.67%

Change Compared to 2011

7.1 7.6

3

6.2 5.2

Taxes and Fees

4.9

61.70%

Change Compared to 2011

6 6

4.7

3 3.1

Time Costs

3.45%

Change Compared to 2011

6.8 6.5

Participation and Predictability

5.8

Change Compared to 2011

7.1 6.5

Transparency

Change Compared to 2011

Barriers to Business Entry

2012 2013 Skenderaj 2011 2012 2013 Suharek 2011 2012 2013 Vitia 2011 2012 2013 Vushtrri 2011 2012 2013 L-ZPZvecan 2011 2012 2013

3.9

6.1 4.7 41.03%

6.6 5.5 -9.41%

4.9 4.3 5

44.71%

14.31%

89

ANNEX 4: STRATEGIC STUDIES AND PROJECTS FUND In order for legal reforms to succeed and “take root” in society, it is important that the public embrace them. This requires that people be informed about the reforms and understand why they are necessary. To involve citizen stakeholders in project reforms and increase the capacity of indigenous organizations to influence the reform process, USAID|BEEP continues utilization of its Strategic Studies and Projects Fund (SSPF). The SSPF advances reforms across all USAID|BEEP components by awarding grants and subcontracts to Kosovo-registered, non-governmental entities pursuing reform-minded initiatives. Specific efforts supported by the SSPF are discussed above in the report. In total, USAID|BEEP spent $1,563,665 through the SSPF mechanism. These grants and subcontracts proved crucial to the achievement of Project activities, including through comprehensive public outreach initiatives, carrying out of the Municipal Partnership Program, implementation of the KSA SMIS, upgrade of the CRK software, and many others.

Special Funds Grants and Subcontracts Grants

Society for Certified Accountants and Auditors of Kosovo (SCAAK) Center for Policies and Advocacy (CPA) American University of Kosovo (AUK) American Chamber of Commerce in Kosovo (AmCham) R&B Consult

Subcontracts PR Solutions CRAFT Communications Asseco Global Consulting and Development Associates (GC&DA) Cacttus MDA RTC Entermedia Sejdiu & Qerkini UBO Consulting Koperativa KOMTEL Rrota Spanish Association for Standardization and Certification (AENOR)

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

90

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

91

ANNEX 5: FINANCIAL REPORTING BEEP QUARTERLY FINANCIAL REPORT MAY – JULY 2013 AND ANNUAL ACCRUALS Total obligated amount remaining: $0 Quarterly Costs Invoiced (May – July 2013)**

Invoiced to Date****

Contract Budget Remaining

Contract Budget

Long Term (US)

$22,960

$2,202,329

$2,262,169

$59,840

Short Term (US)

$139,097

$1,056,028

$1,041,533

-$14,495

Long Term (TCN)

$0

$479,061

$477,263

-$1,798

Short Term (TCN)

$0

$114,581

$166,741

$52,160

Short Term (Local)

$13,890

$75,280

$60,935

-$14,345

Home Office (US)

$14,445

$129,620

$166,114

$36,494

Local LT Professionals

$129,206

$1,543,939

$1,527,101

-$16,838

Multiplier on TCN/CCNs

$360,050

$4,292,948

$4,330,157

-$37,209

Total Work Days Ordered*

$319,598

$9,893,786

$10,032,013

$138,227

$24,588

$334,770

-

Fringe (Direct and Indirect)

$153,128

$443,689

-

Travel and Transportation

$10,759

$280186

-

Allowances

$56,631

$800,273

-

Other Direct Costs

$85,159

$722,349

-

Equipment & Vehicles

$15,000

$231,598

-

$1,234

$316,376

-

Local Support Salaries

Training Grants

$23,521

$211,587

-

Subcontracts (non-local)

$169,951

$304,116

-

Special Studies and Projects Fund***

$136,354

$1,433,255

-

Total Materials

$676,325

$5,078,199

$5,797,156

$718,957

$33,265.31$

$248,942

$293,208

$44,266

$1,029,188

$15,220,927

$16,122,377

$901,450

General and Administrative

Total Invoiced

*Total Workdays Ordered includes multiplier of 1.94 **Invoiced amounts are approximate based on predicted July 2013 numbers ***Includes costs for local subcontracts ****Includes actual costs incurred through June 2013 and vouchered to USAID

USAID Business Enabling Environment Program Final Report July 2010 – July 2013

92

U.S. Agency for International Development Mission in Kosovo Ismail Qemali Street, No. 1 Pristina, Kosovo 10130 Tel: +381 (0) 38 243 673 Fax: +381 (0) 38 249 493