Slovakia abandons Singapore model

SINGAPORE, the name of the pet project of former economy minister Juraj Miškov, which was intended to ease the administrative burden on businesses and which took its inspiration from the rapid economic development of the eponymous Asian city-state, has been halted. Economy Minister Tomáš Malatinský, a former head of the Federation of Employers Associations of Slovakia (AZZZ) whom Smer invited to handle the government’s economic agenda, said he would create his own programme instead, the Hospodárske Noviny financial daily reported on September 6.

Economy Minister Tomáš MalatinskýEconomy Minister Tomáš Malatinský (Source: TASR)

SINGAPORE, the name of the pet project of former economy minister Juraj Miškov, which was intended to ease the administrative burden on businesses and which took its inspiration from the rapid economic development of the eponymous Asian city-state, has been halted. Economy Minister Tomáš Malatinský, a former head of the Federation of Employers Associations of Slovakia (AZZZ) whom Smer invited to handle the government’s economic agenda, said he would create his own programme instead, the Hospodárske Noviny financial daily reported on September 6.

The Singapore project comprised 100 measures that in five years were supposed to result in a 25-percent drop in the administrative burden on businesses operating in Slovakia.

The package included, among other things, a simpler process for setting up a firm, simpler construction procedures, better enforcement of claims, and simpler administration of taxes and payroll taxes.

The ministry also planned to shorten the time required to set up a company to two or three days, to reduce the cost to €1 and to decrease the ongoing administrative burden by 25 percent, saving companies a total of €100 million a year.

Malatinský is phasing out the project based on a government decision not to back it.
“The [new] project will be launched at the end of September/early October,” Economy Ministry spokesman Stanislav Jurikovič told Hospodárske Noviny.

By the time The Slovak Spectator went to print on September 13, the ministry had not provided any further information about its new plan.

The decision to cancel and replace the Singapore project came just as Slovakia scored its worst-ever ranking in the World Economic Forum’s (WEF) Global Competitiveness Report. In this year’s report it fell from 69th position to 71st, with the high burden of government regulation and the low quality of government services for improved business performance being among the main reasons behind the drop.

The Institute for Economic Analyses (IHA), under the Economy Ministry, reported in June 2011 that the total annual administrative burden on companies operating in Slovakia was estimated to be €1.98 billion, or 3 percent of GDP.

The institute identified 180 reporting duties which the state imposes on businesses in Slovakia, and estimated that the total cost of compliance was €1.25 billion per year.

Malatinský’s external advisor Róbert Kičina, the executive director of the Business Alliance of Slovakia (PAS), a professional association representing entrepreneurs in Slovakia, told The Slovak Spectator that he does not consider it right that the government has failed to back the Singapore project and has questioned its importance.

“I understand that the Ministry of Economy does not continue to carry out the Singapore project and that it is working on a new plan to reduce bureaucracy which would be acceptable to other departments, since without the support of other ministries, and in particular the Ministry of Finance, it will not be possible to reduce the administrative burden which bothers businesses,” said Kičina.

The PAS, which is a partner organisation of the WEF, stressed that Slovakia has become the third-least competitive country in the European Union, ahead of only Romania (in 78th place) and Greece (in 96th), according to the WEF ranking.

When asked about the reasons for such a drop, Kičina responded that no significant reform has been carried out in recent years to improve the conditions of business to any significant degree.

“Also this is why we have ineffectively functioning public institutions, weak enforceability of laws, weak judicial independence, a lot of favouritism and corruption, a lot of red tape, and an ineffective structure of public spending. Today the situation is worsened by the labour law and tax system, which were once top competitive advantages for Slovakia but today have gradually worsened into competitive disadvantages,” Kičina said.

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