Temperature slumps in Poland's business climate

The Polish economy slumped from 45th position in 2005 to 54th this year as a place to do business. Not only did Poland end up behind the Baltic states - who rated particularly well and made the top 30 - but also stayed behind its fellow Visegrad group members: the Czech Republic (41st), Slovakia (37th) and Hungary (52nd).

The World Bank's annual report looked at 155 economies worldwide and ranked them according to a seven-point criteria to find out how entrepreneur-friendly they are. It tracked a set of regulatory indicators related to business startup, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements.

"Eastern and Central Europe improved the most in the area of business regulations within the last two years, which means changes are consistent, but Poland has to make a bigger effort to keep up with its neighbors," said Sylvia Solf, a private-sector development specialist at the World Bank.

The main obstacles to doing business in Poland are taxes, legal regulations and an omnipotent bureaucracy. The country managed to reduce delays in the legal system and improve business licensing procedures, when it passed the Freedom of Economic Activity Act, but the World Bank says more reforms are necessary. Contract enforcement is a particularly challenging problem in Poland, as it takes up to 980 days for a contract dispute to be resolved.

"Poland is on the right track but soon risks staying behind other countries in the CEE region, so it simply cannot afford not to implement reforms," Solf concluded.

Sylvia Solf, private-sector development specialist of the World Bank

 "Poland scores pretty high when it comes to CIT or VAT. High social-security contributions and payroll costs blow the amount of total tax payable out of proportion. What's more, the tax system is very complicated - an entrepreneur has to pay 43 different taxes each year. Something should be done to simplify the procedure."

Lubomira Zimanova-Beardsley, senior counsel at the World Bank

 "Demand for court services in Poland is among the highest in the region. Public expenditures and production in the justice sector are also pretty high. However, it does not translate into court performance. The picture is further blurred by the inconsistent performance of courts, with courts in Warsaw being rather poor. It should not be so as it's around the capital city."