E - Governance in Bosnia and Herzegovina

Public administration reform in Bosnia and Herzegovina has been in progress in past fifteen years, ever since the Public Administration Reform Coordinator’s Office has been established in October 2004 pursuant to the decision of the Council of Ministers. Results achieved are, to put it mildly, questionable and Bosnia and Herzegovina needs to make a great leap in implementation of these reforms.  

In BiH public circles end of October was marked by the release of World Bank’s Doing Business 2020 report where Bosnia and Herzegovina takes 90^th position out of 190 world countries (Doing Business 2020, World Bank Group). In comparison to the last year’s issue of Doing Business 2020 report, our country fell for one place on the list.  

One area in this report has always been particularly unfavorable for Bosnia and Herzegovina, and that is Starting a business. According to the latest report, Bosnia and Herzegovina is at 186^th position out of 190 countries benchmarked in the report.

Data in the report suggests that in order to start a business in BiH, there are 13 procedures to be followed which requires 80 working days of time. For the sake of comparison, in the countries of Europe and Central Asia it takes on average 5.2 procedures to be followed which requires 11.9 working days for the same type of business. In the area of paying taxes, which is another important segment of doing business, Bosnia and Herzegovina is at 141^st position in the world, with the total number  of 33 payments a year which take up 411 working hours of time.  

There is a phrase which can often be heard in the public as well as statements of the political subjects, and that is one-stop-shop, and it is offered as a solution to these issues. It is rather self-explanatory. One-stop-shop is a single place where, theoretically, all business-related requirements for starting a business would be met.

Since December 2013 there are 11 one-stop-shops in the Republika Srpska. According to the information presented by Jelena Derajić, One-stop-shop coordinator in March 2017, introduction of one-stop-shops reduced the number of procedures for business registration (from 10 to 5) and time required for starting a business (from 23 to 5 working days).  

Therefore, it is clearly indicated that introduction of one-stop-shops would expedite the process and reduce the costs of opening a company in Bosnia and Herzegovina, or in this case Federation of Bosnia and Herzegovina. However, in case of BiH, one-stop-shops should have been implemented 10 years ago to provide BiH competitive advantage over regional countries.

In interviews with business owners held for the purpose of this research, none of the interviewed business owners stated that process of starting a business as the main problem they were facing, not at the time they had been starting the business, nor at present, and none of them considered it the main obstacle which turns potential investors away from BiH. However, it is important to emphasize that they were very supportive of implementation of one-stop-shops as measure which would facilitate doing business in Bosnia and Herzegovina.

Key difficulty of doing business in Bosnia and Herzegovina in the context of speed and working hours consumption is too much paperwork burdening the business operations.

There is a number of aspects which present greater issue than the registration of companies. Tax application and paying taxes are certainly some of them. According to Doing Business 2020 report Bosnia and Herzegovina is ranked at 141^st position in the world in terms of easiness of business operations in this aspect. In course of single year, companies doing business in BiH make 33 payments on average and spend 411 hours on those procedures, which is more than double the amount of time required for the same procedures in countries of Europe and Central Asia. Regional countries which adopted some form of e-administration, such as Montenegro and Croatia, take much higher position in this indicator. Montenegro is at 72^nd place, whereas Croatia is at 49^th.

Second problematic aspect not covered in Doing Business reports is signing any contracts. Current situation is that every contract signed by a company, with an employee or other legal subject, must be printed in hard copy and stamped either with company stamp or notary stamp. According to findings established upon insight into the questionnaire developed for the purpose of this research, medium enterprises (up to 30 employees) spend between 20 and 40 hours per month at this task only. In case e-signature ever gets implemented in BiH, process of signing all the relevant documents of a company would be significantly simplified and that would allow for faster and smooth business operations.

In the contemporary world we live in, the world where paperless business operations are rapidly being introduced, thinking that one-stop-shop would represent significant incentive to investors to come and invest in our country could be fatal.  Instead of resolving a single problem, such as opening a company, we should think about how to make entire company business as simple as possible. One country we could look up to in terms of meeting the needs of investors and doing business is Estonia.  

Example of good practice – Estonia

Estonia is one of the countries which made the greatest progress in the area of e-Governance. Their e-business registration model was introduced in 2007 and it shortened the time of business registration from 5 days to about 2 hours, made the country more interesting to the investors and reduced consumption of administrative resources. Arrangements in place were the introduction of e-ID (electronic identification document). According to the latest available data 98% of the Estonians have an e-ID. All the Estonian citizens with e-ID can register on e-business register portal (https://ettevotjaportaal.rik.ee/ ). After completing the registration at business register portal every citizen has the possibility to open a company in few simple steps, and entire process takes up around 20 minutes. It should be mentioned that in 2009 Estonia set the world record in online business registration time (18 minutes and 3 seconds). Comprehensive explanation of entire process is available at http://abiinfo.rik.ee/articlesofassociation. In Estonia, staggering 98% of business registrations are completed online.  

It is crucial to emphasize that since 2014 Estonia allowed e-residency, an electronic citizenship, which allows anyone to start a business in Estonia. In line with the latest available data, in the past 5 years 50,000 people with Estonian e-residency have opened over 6,000 new businesses with company seat in Estonia.

According to the Doing Business 2020 report, Estonia takes 18^th position on global scale in relation to doing business, and in relation to starting a business it is in the 14^th position. Starting a business in Estonia requires only 3 procedures which take up on average 3.5 working days. In terms of paying taxes, Estonia is on 12^th position with 8 payments per year which take up 50 working hours.  

Therefore, having in mind all the above mentioned facts, it is necessary for the government in Bosnia and Herzegovina to start digitalization of all the services, for the citizens but also for the companies. That will result in substantial reduction of visible business expenses, shorter procedures and potentially easier life to the ‘ordinary’ citizens.

In that context, one crucial step is to finally allow implementation of electronic signatures on the territory of Bosnia and Herzegovina.  

In mid-October 2019 Deputy Minister of communications and transport of BiH Saša Delipagić was handed the first card with electronic signature. This event is certainly one of the milestones reached in the area in the past few years bearing in mind that the Law on Electronic Signature was adopted 13 years ago. However, popularization of e-signature requires serious engagement of all the relevant institutions in BiH.  

Institutions in BiH should change a set of regulations in order to make e-signature recognized as equally valid as hand signature in all administrative procedures, and then start the implementation of e-Service and e-Register. One question is frequently asked by the citizens: How can electronic services help us? The answer is simple: in every administrative procedure it lies in every administrative procedure and situation when you asked yourself „Why am I standing in this queue? “Or „How come the system knows I have unpaid tickets but fails to know where I was born, whether I have citizenship or have unpaid taxes? “.

E-services should introduce various administrative systems and enable the citizens and companies to apply for personal documents or if they wish get them delivered at home address; open a company; fill in tax forms; apply for construction permit; get e-certificate they can print out and deliver; apply to public call; make or require changes in e-register, etc. – all that with single click, online, from the comfort of their home or office, without going to administrative offices. And they should be able to sign all those documents with e-signature and pay for services with their credit card (data of the Central Bank from March 2019 suggest that number of various forms of credit cards in BiH is 2.1 million). All this minimizes corruption, as it eliminates direct personal contact and verbal communication with bureaucratic apparatus.

E-registers should update all the information in real time in courts, ministries, agencies, services, administrative offices etc. Time required for processing necessary administrative processes should be reduced, which would result in reduction of barriers for doing business (cut red tape), cut administrative costs, provide for transparent activities of the institutions, private and businesspersons, and provide less space for misusing the system.

In addition to that, Ministry of Communications and Transport sent into procedure new Law on Electronic Identification which is harmonized with the EU legislation and we may say that adoption of this Law is one of the imperatives in the upcoming period.  

Of course, these are the first steps of complete implementation of digitalization in true sense and it is important to emphasize that if Bosnia and Herzegovina is truly affirmed to implement the public administration reform, there is no more time left for partial solutions or solutions that should have been implemented a decade ago.