What is hindering your business in Estonia?

05.03.2012, 11:18

The Doing Business survey published by the World Bank and International Finance Corporation, covering 185 countries showed that over the past year Estonia, ranking 24th , has fallen 7 places in the list of the world’s most business friendly countries, writes Anne Veerpalu, senior associate of Law Firm GLIMSTEDT.

The Doing Business survey primarily assesses the legal environment relating to business (incl. setting up a business, construction licenses, protection of property and investments, contract enforcement, closing down) and based on that makes a list of the countries that are the most friendly as business environment. A country will get a minus for every individual contact with an authority that an entrepreneur must make when setting up and running a business.

The survey is based on the assumption that a business environment needs regulation that is prepared “wisely”, well thought through, transparent and accessible to everyone, effective and with balanced interests, i.e. that the need to protect consumers will not incur irrational expenses on the entrepreneur. The overview of developments in the regulatory policy in 2011, compiled by the Estonian Ministry of Justice, shows that Estonia’s position in the Doing Business list is critical to defining the regulatory policy trends of Estonia.

However, an overview of the regulatory quality, compiled by the National Audit Office at the end of the last year, shows that practically no assessment whatsoever has been made on the effects of regulations on the business environment. Thus, in reality the effects of regulation on business environment have not been clearly mapped or reasoned. Minister of Justice, Kristen Michal, is hoping that the code of practice for good regulation, approved by the Government at the end of the last year, will remedy this situation.

Therefore, those responsible for the regulatory policy have realized that entrepreneurs play an important role in making the business environment more attractive – by generating markets, creating competition, investing in R&D, constructing ports, roads and infrastructures.

Business cannot grow to its full potential in Estonia not only because of a lack of resources, skills or the will, but also because it finds a more fertile environment to grow elsewhere – for example, in one of those 23 countries ranking ahead of Estonia in the “friendliness” list.

In his New Year’s wish Estonian venture capitalist Allan Martinson in an extremely positive and optimistic tone called on the entire population of Estonia to start a business during the current year. As stated in the Estonia business daily Äripäev (January 4th, 2012, Editorial) the condition for success as an entrepreneur in Estonia are not bad at all: “After all, Estonia meets all the main preconditions. Setting up a business takes less than a minute. Our business environment is simple. Our information technology infrastructures are advanced. Our taxes are low compared to our neighbors.”

So what is still missing? All of you who have already granted Martinson’s wishes beforehand and are engaged or in some other way participate in business know the answer.
Thus, I am calling on you to have a say and let us know what is it that makes the life of an entrepreneur (an existing and a future one) hell.

• How could Estonia become more business friendly and rise in the Doing Business list instead of falling?
• Have you though of what is inhibiting the freedom of your business to reach its full potential?
• Is it a national requirement or limit or a municipal restriction that is too demanding? Are those restrictions rational and proportional?
• Could the regulation be changed to better support your business?
• How could Estonia be transferred from a “good” regulatory policy development trend to a “wise” regulatory policy development trend?

GLIMSTEDT’s in Business Transaction team welcomes your suggestions and opinions about what to do in order to make Estonia one of the world’s most business friendly countries. Please send you opinion and thoughts to anne.veerpalu@glimstedt.ee