BETTER REGULATION

SERIES Vol. III

Bulgaria

EX-POST IMPACT
ASSESSMENT
of the Act on Limiting Administrative Regulation
and Administrative Control on Economic Activity

JULY, 2010

Europe and Central Asia Region

Private and Financial Sector Development Department
 Report No. 55728-BG

BULGARIA

Ex-Post Impact Assessment

of the Act on Limiting Administrative

Regulation and Administrative Control on
Economic Activity

Vol. III
July, 2010

THE WORLD BANK 
PRIVATE AND FINANCIAL SECTOR DEVELOPMENT DEPARTMENT 
CENTRAL EUROPE AND THE BALTIC COUNTRIES 
EUROPE AND CENTRAL ASIA REGION 
WASHINGTON, DC 
 
  

© 2010 The International Bank for Reconstruction and Development / The World Bank
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Report No. 55728-BG

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Currency and Equivalent Units 

(Exchange rate effective July 12, 2010)

Currency Unit=Bulgarian Lev (BGN)
EUR 1=1.95583 US $ 1=1.5557 BGN

FISCAL YEAR
1 January – 31 December

WEIGHTS AND MEASURES

Metric System

Vice President: Philippe H. Le Houerou, ECAVP

Country Director: Peter C. Harrold, ECCU5
Sector Director: Gerardo Corrochano, ECSPF
Sector Manager: Lalit Raina, ECSPF
Task Team Leader: Evgeni Evgeniev, ECSPF

ii
ABBREVIATIONS AND ACRONYMS
APC Administrative Procedures Code
ARC Administrative and Regulatory Costs
BEEPS Business Environment and Enterprise Performance Survey
BNB Bulgarian National Bank
BULSTAT Unified Identity Code under the Unified Register for Identification of Economic
and Other Subjects in the Republic of Bulgaria
CEG Council for Economic Growth
CEM Council for Electronic Media
CoM Council of Ministers
CRC Communications Regulation Commission
DCoM Decision of the Council of Ministers
EC European Commission
ECSPF Finance and Private Sector Development Department at the World Bank
ESC Economic and Social Council of the Republic of Bulgaria
EU European Union
FSC Financial Supervision Commission
GDP Gross Domestic Product
IMD Institute for Management Development
IO Information Obligation
IPAEI Institute of Public Administration and European Integration
LARACEAA Limiting Administrative Regulation and Administrative Control on Economic
Activity Act
LEG Law on Electronic Governance
LP Legal Person
MAF Ministry of Agriculture and Food
MEYS Ministry of Education, Youth and Science
MC Municipality Council
MF Ministry of Finance
MJ Ministry of Justice
MH Ministry of Health
MI Ministry of Interior
MLSP Ministry of Labor and Social Policy
MOEW Ministry of Environment and Water
MRDPW Ministry of Regional Development and Public Works
MSAAR Ministry of State Administration and Administrative Reform
MTITC Ministry of Transport, Information Technology and Communications
NAMRB National Association of Municipalities in the Republic of Bulgaria
NAVET National Agency for Vocational Education and Training
NRA Nuclear Regulation Agency
NRP National Reform Program
NRR The Board of Swedish Industry and Commerce for Better Regulation
NSRF National Strategic Reference Framework
NSSI National Social Security Institute
OECD Organization for Economic Cooperation and Development
OPAC Operational Program "Administrative Capacity"
PPP Public-and-Private Partnership
RIPHPC Regional Inspectorate for Public Health Protection and Control
SCEWR State Commission on Energy and Water Regulation
SG State Gazette
SL Spatial Law
SMEs Small and Medium-Sized Enterprises
UK United Kingdom
USAID United States Agency for International Development
WEF World Economic Forum

iii
  

TABLE OF CONTENTS

ACKNOWLEDGEMENTS ................................................................................................................... vii

EXECUTIVE SUMMARY ................................................................................................................... viii

CHAPTER I
INTRODUCTION .................................................................................................................................... 1
1.1 Importance of the LARACEAA .................................................................................................... 1
1.2 Scope of the Assessment ............................................................................................................... 2
1.3 Sources of Information .................................................................................................................. 2
1.4 General Limitations of the Analysis .............................................................................................. 3
1.5 Structure of the Report .................................................................................................................. 5

CHAPTER II
BACKGROUND OF THE ASSESSMENT ........................................................................................... 6
2.1 Policy Framework ......................................................................................................................... 6
2.2 Goal and Objectives of the Act ..................................................................................................... 9
2.3 Performance Indicators of the Assessment ................................................................................. 10

CHAPTER III
EX-POST IMPACT ASSESSMENT OF THE LARACEAA ............................................................ 13
3.1 Government Measures and Initiatives ......................................................................................... 13
3.1.1 Administrative and Regulatory Burden-Reduction Measures ........................................... 13
3.1.2 Institutional Initiatives ....................................................................................................... 16
3.1.3 Conducted Impact Assessments, Analyses and Trainings ................................................. 18
3.1.4 Legislative Initiatives ........................................................................................................ 19
3.2 Status and Dynamics of Quantitative Indicators ....................................................................... 19
3.2.1 Outcome Indicators ........................................................................................................... 19
3.2.2 Output Indicators ............................................................................................................... 24
3.2.3 Results Indicators .............................................................................................................. 25
3.3 Status and Dynamics of Qualitative Indicators ........................................................................... 29
3.3.1 Achievement of the LARACEAA Objectives: Results from Survey Findings .................. 29
3.3.2 Case Studies of Regulatory Regimes at the Local Level .................................................... 30
3.4 Summary of Quantitative and Qualitative Analyses ................................................................... 31

iv
TABLE OF CONTENTS

CHAPTER IV
MAIN PROBLEM, DRIVERS AND EFFECTS OF THE PROBLEM, AND RECOMMENDED
AMENDMENTS TO THE LARACEAA ............................................................................................. 34
4.1 Underlying drivers of the problem (“roots of the tree”) .............................................................. 34
4.2 Effects of the problem ................................................................................................................. 36
4.3 Key Recommendations for Amendments to the LARACEAA ................................................... 37

REFERENCES ....................................................................................................................................... 39

APPENDICES ........................................................................................................................................ 41
Appendix 1: Licensing Regimes’ Compliance with the Requirements of the LARACEAA .................. 41 
Appendix 2: Information on the Status of Regimes under the Better Regulation
Program (2008-10) ................................................................................................................................... 43 
Appendix 3: Implementation of the Measures Under the
Better Regulation Program (2008-10), as of April 2009 .......................................................................... 47 
Appendix 4: Survey Questionnaire to Stakeholders................................................................................ 51 
Appendix 5: Analysis of Stakeholders’ Replies to Survey Questionnaire .............................................. 56 
Appendix 6: Review of Regulatory Regimes at the Local Level ............................................................ 59 
Appendix 7: Licensing Regimes and Existing Registers as per LARACEAA Requirements ................ 66 

v
  

TABLE OF CONTENTS

Table 1: Performance Indicators of the LARACEAA's Ex-post Impact ............................................. 11 

Table 2: Improvement of Bulgaria’s Doing Business Ranking Since 2004......................................... 21 
Table 3: Achievement of the LARACEAA Objectives (in percent) ................................................... 30 
Table 4: Allocation of Reviewed Regimes by Municipalities ............................................................. 31
Table 5: Summary Matrix of State and Dynamics of Quantitative Performance Indicators ............... 31

Figure 1: Escalator of Regulatory Regimes....................................................................................... 6 

Figure 2: Small number of licensing regimes amended since 2003 ..................................................... 15 
Figure 3: A few licensing regimes introduced and very few abolished since 2004 ............................. 15 
Figure 4: Bulgaria’s Global Competitiveness Index ranking is low and not improving ...................... 20 
Figure 5: Bulgaria’s ranking by the Competitiveness Index of IMD slightly improved ..................... 20 
Figure 6: Bulgaria’s relative ranking by the Doing Business Index improves ..................................... 22 
Figure 7: Bulgaria takes 44th position as per Doing Business 2010 ranking ....................................... 22 
Figure 8: Bulgaria’s Product Market Regulation Index compares well with EU-average ................... 23 
Figure 9: Bulgarian Firms do not rate Business Licensing and Permits as one of the top
constraints in 2009 (in percent) ............................................................................................................. 23 
Figure 10: Share of companies showing regulation as the most significant restraint to business
in 2009 (in percent) ............................................................................................................................... 24 
Figure 11: Decreasing values of WEF’s Burden of Government Regulation and Efficiency
of Legal Framework since 2003 and Transparency of Government Policymaking since 2007 ............ 26
Figure 12: Bulgaria’s Burden of Regulation is falling as per WEF relative ranking, while Bulgaria’s
Efficiency of Legal Framework and Transparency of Policymaking are somewhat constant .............. 26 
Figure 13: IMD Indices for Bulgaria of Bureaucracy, Ease of Doing Business and
Starting a Business are somewhat similar in 2009 compared to 2006 .................................................. 27 
Figure 14: IMD’s Bulgaria Ranking of Bureaucracy is Worse Than Starting a
Business and Ease of Doing Business ................................................................................................... 27 
Figure 15: Time Spent by Senior Managers of Manufacturing Firms in Dealing with requirements of
Government Regulations in Bulgaria dropped substantially in 2009 compared to 2007 ...................... 28 
Figure 16: Bulgaria has better standing vis-à-vis other countries in Europe and Central
Asia Region regarding Days to Obtain Operating License in 2009 (in percent) ................................... 29
Figure 17: Problem Tree ...................................................................................................................... 37

Box 1: Establishment of a Pilot Integrated System of an Electronic Region ........................................ 16 

vi
ACKNOWLEDGEMENTS 

This report is prepared within on-going World Bank’s Analytical and Advisory support in the area
of regulatory reform to the Bulgarian Government in collaboration with the Ministry of Economy,
Energy and Tourism. The World Bank team was led by Evgeni Evgeniev, Private Sector
Development Specialist, Finance and Private Sector Development Department (ECSPF) and
included experts from Club ‘Economika 2000’ (think tank, based in Sofia), consisting of Spartak
Keremidchiev, Stefan Ivanov, Borislav Tafradjiyski, and Maria Georgieva (all Economists), and
Valchin Daskalov (Lawyer). Julian Nikolov, Director of the Economic Policy Directorate at the
Ministry of Economy, Energy and Tourism (since December 2009) and Eli Anavi, former Director
of the Enterprise Policy Directorate and now Head of the Innovation, Entrepreneurship and
Business Environment Division at the Ministry of Economy, Energy and Tourism and their team,
collaborated closely with the Bank team since inception of the task and provided strategic
guidance at all stages of the work. The World Bank team would like to thank also the participants
at the Better Regulation Group Working Meeting in January 2010 who provided useful feedback
to the preliminary findings of this report. Anne T. John, Marga O. De Loayza, Nikolinka Ivanova
and Vessela Stambolyiska, all from the World Bank, provided precious technical support. Thank
goes also to John Felton, who provided edits to previous versions of the report. This report is also
a result of the devoted work of the translator, Maria Georgieva, who made its final Bulgarian
version possible.

The report was prepared under the general guidance of Theodore O. Ahlers (Country Director for
Bulgaria since May 15, 2009) and Peter C. Harrold (Country Director for Bulgaria since January
25, 2010), Fernando Montes-Negret (Sector Director, ECSPF until December 21, 2009), Gerardo
Corrochano (Sector Director, ECSPF since February 15, 2010) and Lalit Raina (Sector Manager,
ECSPF). Florian Fichtl (Country Manager for Bulgaria) provided strategic guidance to the team
during the process of consultation with public and private actors and contributed with valuable
comments on earlier drafts.

The team would like to specifically thank John Daniel Pollner (Lead Financial Officer, ECSPF)
for reviewing earlier drafts of the report and providing helpful comments and suggestions. Sereen
Juma (Sr. Country Officer, ECCU5), Rosalinda Quintanilla (Lead Economist) and Stella Ilieva
(Senior Economist) from the World Bank have also been supportive with their comments on an
earlier draft.

The World Bank team is also appreciative of the feedback received during the July 6, 2010 public
meeting of the Council for Economic Growth, chaired by H.E. Traycho Traykov, Minister of
Economy, Energy and Tourism, and of the support of colleagues from line ministries and public
agencies in Bulgaria, of their willingness to share information and valuable insights.

Peer reviewer of the report was Marc Reichel (international expert on administrative barriers).

vii
  

EXECUTIVE SUMMARY
The Ex-post Impact Assessment of the Limiting Administrative Regulation and Administrative
Control on Economic Activity Act (LARACEAA) is part of the World Bank’s support to the
Government of Bulgaria through on-going Analytical and Advisory work in the area of
regulatory reform. This is the fourth report in the course of three years of World Bank Analytical
and Advisory support to the Government of Bulgaria on regulatory reform. The first joint World
Bank and Ministry of Economy and Energy report analyzed administrative procedures in three
sectors of the economy—tourism, food, and road transportation—calling for reduction and
simplification of certain administrative regimes that are burdensome. It emphasized superfluous
regulation at the municipality level as well. Another report, Bulgaria’s Policy for Regulatory
Reform in the European Union: Converging with Europe’s Best Regulatory Environments,
recommended a national nine-step strategy that was approved by the Council for Economic Policy
on October 19, 2007. These two reports, and the consultation process with other line ministries,
business associations and think tanks, actually paved the way for the Better Regulation Program
2008–2010, approved by the Bulgarian Government in April 2008. Another World Bank report
from June 2009 called for a systematic, fair, and transparent regime of state fees. The World Bank
has also prepared a report on Administrative and Regulatory Barriers to Business in Bulgaria.

The purpose of the present ex-post impact assessment of the LARACEAA is to: (i) assess
how the Act has been enforced, (ii) identify and estimate the impacts of the Act, and (iii)
provide recommendations for amendments to the Act. Chapter I emphasizes the importance of
the Act as part of the Bulgarian Government’s role in advancing regulatory reform and improving
the business environment; gives the scope of the assessment and presents the sources of
information utilized; and delineates general limitations of the analysis. Chapter II outlines a
policy framework by discussing coherence with the Governmental and European Union (EU)
policies, as well as touching upon relevant documents on regulatory reform, followed by analysis
of the goal and objectives of the Act, and identification of performance indicators for the
measurement of the impact of the Act. Chapter III depicts the results of the ex-post impact
assessment, while the final Chapter IV identifies the main problem; discusses underlying drivers
and effects of the problem; and proposes recommendations for amendments to the Act.

Main Findings
Major Problem Identified: Broad state intervention in economic activities as manifested by
the presence of a large number of regulatory regimes introduced by special laws that result in
reduced transactional efficiency and competitiveness of the economy.
The Assessment is based on quantitative and qualitative analyses. This report uses a set of
quantitative indicators to measure the impact of the Act and the achievement of its goal and
objectives for the period after its entry into force in 2004 until end-2009. General limitations of
the analysis are identified, including the specificity of the Bulgarian legal system, the lack of an
ex-ante assessment of the Act, impact of the EU accession process, and the lack of a performance
monitoring system of the regulatory and administrative burdens. The study is complemented by a
qualitative analysis to overcome the hurdles in performing the assessment (e.g. case studies of
regulatory regimes at the local level; survey of public officials and other stakeholders; and
analysis of the institutional, legal and policy environment).

viii
 Results from Quantitative Indicators:
 Indicators showing the least improvement: Efficiency of the legal framework (e.g. in
settling disputes or in challenging regulations) and transparency of policy-making.

 Indicators showing progress: Overall burden of regulation (e.g. time spent by the senior
management in dealing with regulations), bureaucracy (e.g. paperwork, unnecessary queuing
or submission of documents by business), ease of doing business (e.g. business legislation in
terms of openness, competition and regulations, labor regulations), among others.

 Indicators showing the most improvement: Share of firms identifying business licensing
and permits as major constraints, product market regulation index, number of regimes
proposed for abolition or simplification, average number of days needed for the issuance of an
operating license, among others.

Results from Qualitative Indicators:

 Transposition of EU regulations added additional administrative and regulatory
burdens. Bulgaria’s accession to the EU and the rapid introduction of regulations stemming
from the acquis communautaire during the period of analysis and evaluation exerted an
influence over the condition and dynamics of business regulation. The regulatory and
administrative burdens for businesses have increased as a result of the transposition of EU
regulations in the Bulgarian legal system.

 Partial achievement of the LARACEAA’s objectives. Survey analysis indicates that the
LARACEAA’s objectives have been only partially achieved. Among the achieved objectives
this report finds: (i) “Clear definition of the types of regimes regulating economic activity,”
(ii) "Protect free economic initiative”, and (iii) “Clearly define the limits of administrative
intervention in economic activity at central and local level.” However, a number of important
objectives set out in LARACEAA have not yet been achieved, including: (i) “Increase
transparency in the introduction of regulatory regimes,” (ii) “Reduce sources of corruption by
limiting the discretionary power of administration,” (iii) “Secure publicity of the work of
administrative bodies in applying normative acts related to administrative regulation and
control on economic activity, as well as of the reasons for their change,” (iv) “Restricting and
reducing publicly unjustified burdening of economic activity,” and (v) “Eliminate normative
requirements that may reduce competition.”

 Bulgaria’s Better Regulation Policy has not been carried out consistently and
systematically; improvements have been slow. Therefore there are peaks and valleys in the
results of regulatory reform. The level of national competitiveness is still low compared to
other EU members and developed countries. However, the dynamic of most indicators
displays slow tendency toward improvement.

 Local authorities enforce unnecessary burdens on business and they do not make use of
public registers. The case studies’ review of regulatory regimes enforced at the local level
indicates that many of them evolve form national legislation, and thus do not constitute special
initiatives by local authorities. The local authorities, however, collect available information
and additional requirements that are not directly related to the decision for issuing a permit.
The municipalities do not make use of public registers, which are required by the Act to
publish decisions relating to the regulatory regimes. Some municipalities also enforce an
illegal commercial establishment registration regime.

ix
  

LARACEAA’s Main Issues

Limited scope of the Act. The Act stipulates the main principles of regulatory impact by
distinguishing between two types of regulations: (i) licensing and registration regimes, and (ii)
separate deals or single actions that refer to individual deals. However, most regulation of
business remains beyond the scope of the Act and is covered by the Administrative Procedures
Code and other special laws.
Limited application of the principle of “silent consent”. Art. 28 of the Act provides that this
principle (which means that a business application is presumed to be approved unless it is denied
within a certain period from an administrative body) relates to the issue of permits and certificates
for individual deals or actions, unless otherwise provided by another law. The research found that,
in general, special laws avoid the application of the principle of “silent consent.” In fact, only six
laws apply this principle.
Failure to perform ex-ante impact assessments of proposed regulatory regimes. No ex-ante
impact assessment is ever made during the drafting and submitting of licensing and registration
regimes. Such assessments are required by Art. 3, para 4, 5 and 6 of the Act. The Act also
provided that the impact assessment should be published on the Internet or made public in another
adequate way; this also is not the practice. Most of the 16 amendments to the Act refer to the
introduction of new regulatory regimes and ex-ante impact assessments related to them have not
been conducted.

Inadequate institutional enforcement framework for the Act. The Act does not have an
adequate institutional framework because it lacks an efficient sanction and control system to
enforce compliance with it by the bureaucracy. Also, there is no united Administrative Register of
regulatory regimes, and no administrative body "owns" the Act and has overall responsibility for
its implementation and success.

The Act’s Weak Enforcement has Negative Impacts

High business costs. This is related to the procedures for businesses to apply for and obtain
licenses, registrations, permits and certificates. It is also related to administrative regulation and
control. The costs are both in terms of money paid in higher fees and time spent dealing with
bureaucratic requirements. The high share of the informal economy is one result of heavy burdens
imposed by administrative regulation and control. This implies losses in public welfare and
demands greater public resources for control and sanctions on companies in the shadow economy.

Non-transparency of administrative procedures. Companies that apply for licenses,

registrations, permits or certificates do not receive adequate information on the course and
progress of the procedures. In some cases, applications are not processed in the order they are
received; some companies are given a decision before others who applied earlier. This creates
possibilities for corruption.

Worsened business climate. The weak enforcement of the Act discourages improvements in the
country’s business climate; this is reflected in opportunity costs in terms of otherwise nimble
investment activity and competitiveness of the economy.
Key Recommendations for Amendments to the Act
To address the inherent weaknesses of LARACEAA and the need to realize larger benefits from
the Act, several recommendations for its amendment are put forward. A total of eleven
amendments to the Act (see Table below) are recommended to: (i) improve its administrative
provisions (instrumental amendments); (ii) strengthen its institutional support (institutional
amendments); and (iii) introduce new rules for calculation of administrative fees (economic
amendments).

x
KEY RECOMMENDATIONS FOR AMENDMENTS
TO THE LARACEA ACT

Instrumental amendments
1 Introduction of new key principles of administrative servicing in the Act (e.g., avoidance of
duplication of submission of identical documents to both central and local authorities) relevant to
all relationships between businesses and the administration
2 Application of the principle of “silent consent” for registration regimes
3 Broad implementation of declarations of compliance by applicants, along with suitable
mechanisms for verifying those declarations, instead of requiring official documents issued by a
court or other administrative bodies
4 Establishment of a minimum time period during which an applicant for a license or permit can
correct mistakes on the application
5 Improved oversight and control of the sanctioning mechanism within the administration and
reduction of the burden on controlled entities
6 Introduction of instruments enabling an analysis of whether proposed regulatory regimes comply
with the three groups of criteria under the LARACEAA (national and personal security, human
and property rights, and environment)
Institutional amendments
7 Establishment of a unit within the Council of Ministers Administration that would oversee
implementation of the Act and impose sanctions when public administration officials violate it
8 Establishment of a uniform Administrative Register of regulatory regimes to provide easily
accessible information and advice on all procedures and required documents to all clients
Economic amendments
9 Introduction of additional principles for setting charges for administrative services
10 Regulation of the amount of the charges on the basis of adopted rules
11 Introduction of the principle "one procedure – one charge." Surcharges should be prohibited when
additional actions are required for an applicant to correct mistakes or as an incentive for
administrative officials to perform their jobs

The recommendations listed above may help the Bulgarian authorities use the LARACEAA to
further advance regulatory reform. But they should proceed in parallel with other actions under
the Better Regulation Program and related initiatives. An improved Act can become a powerful
means of reform only if it is part of those broader efforts and has political support at the highest
levels.

xi
  

CHAPTER I 
INTRODUCTION
The first chapter emphasizes the importance of the Limiting
Administrative Regulation and Administrative Control on Economic
Activity Act (LARACEAA) as part of the Bulgarian Government’s
endeavours in advancing regulatory reform and improving the
business environment; gives the scope of the assessment; presents the
sources of information utilized; and delineates general limitations of
the analysis.

1.1 Importance of the LARACEAA

Policymakers consider that the adoption of the LARACEAA is a significant step forward
in the process of regulatory reform in Bulgaria. The Limiting Administrative Regulation and
Administrative Control on Economic Activity Act (LARACEAA) was adopted in 2003 to
facilitate and encourage economic activity by defining and placing publicly justified limits on
the regulations and controls imposed on businesses by national and local government bodies.
Policymakers consider that the LARACEAA is a substantial step forward in the process of
regulatory reform in Bulgaria. In its current version (as of January 2010), LARACEAA is the
result of sixteen amendments.1
Although the 2003 Act was modified from its initial draft, majority of experts and
business leaders consider that the Act created the basis for a more conducive regulatory
environment in Bulgaria. The initial draft of the Act was prepared by a team of lawyers and
economists from the Bulgarian Small and Medium Enterprises Promotion Agency, the Institute
for Market Economics, the Bulgarian Chamber of Commerce and Industry (BCCI), the
Bulgarian Industrial Association, the Commission on Economic Policy to the National
Assembly and the Ministry of Economy. The idea was to adopt rules restricting the unjustified
intervention of state and local authorities into the activity of entrepreneurs and commercial
companies. Some proposals in the initial draft were not included in the adopted version of the
Act. These included such matters as, (i) considering the option of not introducing a regulation;
(ii) the requirement for official exchange of information and documents among the
institutions2; (iii) applying the principle of “silent consent” to regimes with no expedience
(registrations); (iv) the possibility for the administration to authorize business associations to
perform self-regulation, among others. Even so, the majority of experts and business leaders
considered LARACEAA to be a statutory Act laying the basis for a more conducive regulatory
environment in Bulgaria.
LARACEAA stipulates two types of regulations. The Act specifies two types of regulations:
(i) regimes regarding the performance of overall economic activity, and (ii) regulations
regarding separate deals and the execution of single business actions. Some activities stipulated
by the Act can be subject to a licensing regime, and other activities can be subject to the more
liberal regime, defined by the Act as a “registration” regime.
Overall, LARACEAA is a common Act setting clear rules for administrative bodies in
exercising regulation and control of economic activity. The Act sets up clear rules related to

1
The LARACEAA is in force since December 18, 2003.
2
This principle was introduced later on by amendment to the Law, SG 44/2009.
1
  
both the legislation and responsibilities of administrative bodies in exercising regulation and
control on economic activity. In its most important provisions, the Act:
i. Sets up the guiding principles of legislation and administrative procedure related to
economic activity. Among these, the principles of economic freedom (proclaimed by
Art. 19, Constitution), proportionality and legitimate expectations are of particular
importance;
ii. Provides that all regulatory regimes and requirements for permits, certifications and
notifications of separate deals and actions must be authorized by a law. It defines two
types of regulatory regimes: licensing and registration;
iii. Introduces the requirement that regulations at all levels must be motivated by a
clearly defined necessity (from the viewpoint of national security, environmental
protection, or the personal and material rights of individuals), thus limiting the
discretionary power of regulators;
iv. Introduces compulsory ex-ante economic analysis and impact assessment for each
regulation, which must be made public, as well as a requirement for informing in
advance those persons (stakeholders) who will bear obligations or restrictions by virtue
of a new regulation;
v. Limits the power of administrative bodies to require applicants to submit proof of
circumstances which are certified before another administrative body and which are
properly entered in a register;
vi. Defines the obligations of the administration in exercising its powers;
vii. Introduces the principle of “silent consent” for issuing permissions and certificates;
viii. Constitutes the main rules for executing control on business activities;
ix. Adopts a list of economic activities covered by a licensing regime.

1.2 Scope of the Assessment

This report is a result of collaboration between the Government of Bulgaria and the
World Bank. The ex-post LARACEAA report is part of a World Bank support to the
Government of Bulgaria through an on-going analytical and advisory work in the area of
regulatory reform. This collaboration contributed to Bulgaria’s recent progress in the field of
Better Regulation.
The purpose of this Assessment is to assess ex-post the impacts of the Act. The assessment
determines the extent of effect on target groups, institutions, economic environment and the
legal system. It also answers the question of whether and to what degree the realized impacts
resulted directly from the adoption and implementation of the Act. The period covered for this
report is from January 2004 when the Act entered into force through the end of 2009.
The Assessment used both quantitative and qualitative methods of analysis. Data and
information from different national and international sources has been collected and processed,
coupled with a survey addressed to researchers, business representatives, and experts from
public agencies and state institutions applying the Act. Results from analysis of the
implementation of four exemplary regulatory regimes in three municipalities are provided as
well.

1.3 Sources of Information

This report draws on international best practice guidelines. This ex-post assessment
follows the January 2009 Impact Assessment Guidelines of the European Commission (EC).
Best practices in impact assessment applied by international institutions and organizations, such
as the Organization for Economic Co-operation and Development (OECD), the World Bank,
the United States Agency for International Development (USAID), etc., were also studied.

2
  
Given that the EC guidelines are relevant mostly to ex-ante impact assessments, this study also
considered the 2001 Guidelines of SIGMA (a joint initiative of the OECD and the EU,
principally financed by the EU).3
The team also considered Regulatory Impact Assessment (RIA) guidelines, manuals and
instructions developed in Bulgaria on the basis of international standards and best practices for
the assessment of regulatory impact.4
Consultations were carried out as well. There were also consultations carried out for this
assessment, involving a broad circle of representatives of interested parties, including the
National Assembly, central and local government institutions, bodies of local self-governance,
business associations, non-governmental organizations (NGOs), and academia.
Empirical studies were conducted, but the analysis relied mostly on data and information
from other sources. The present Assessment made empirical studies (e.g. survey and analysis
of enforcement of local regulatory regimes in three municipalities), but mainly relied on
information and data published in official documents from national and international sources,
as well as from additional sources.5

1.4 General Limitations of the Analysis

This report presents an ex-post assessment on the overall economic activity in Bulgaria
but there are general limitations for the assessment. The report presents an ex-post
assessment of the impact of LARACEAA on the overall economic activity in Bulgaria and on
all legal subjects who take part in it. There are, however, certain barriers of the analysis that—
along with the presence of a number of informational, institutional and statutory
impediments—constitute limitations for the assessment.

Specificity of the legal system. The general nature and comprehensiveness of the Act make it
difficult to determine whether and to what an extent the observed impacts resulted from the
action of LARACEAA itself, or from the action of other interventions, legislation and factors.
In the Bulgarian legal system, the legislation hierarchy consists of the Constitution, laws and
regulations. The Bulgarian legal system does not recognize the so-called “constitutional laws”
that would hierarchically stand above common laws (LARACEA is a common law) and could
regulate the general principles that common laws have to conform with. In logical sequence,
common and special laws should specify the legal norms of the Constitution from general to
specific provisions, while special laws, in turn, should specify and operationalize common
laws. Quite often, however, logical contradictions arise among the laws. In such cases, an
interpretation of the will and intention of the legislature is required. Where there is a conflict
between a common and a special law, the rules of the special law shall be applied (lex spetialis

3
According to SIGMA (2001, p.19), the impact of operative regulations is assessed to evaluate whether: (i) the
intended objectives were met in an efficient way; (ii) unwanted side effects occurred and to what degree; (iii) the
instrument has proven to be easily implementable; (iv) a high degree of compliance has been reached; and v)
benefits and costs were distributed in a justifiable manner.
4
Those materials include Bulgaria Impact Assessment Guidelines, Council of Ministers (CoM), 2009; Regulatory
Impact Assessment Manual, Institute of Market Economics, 2007; Regulatory Impact Assessment Manual,
Association of Management Monitoring (in co-operation with USAID), 2007; and Impact Assessment, Ministry of
Economy and Energy, April 2006.
5
Such information included, among others: documents and papers of the National Assembly, the CoM, and
sectoral ministries (including programs, strategies, reports, laws, ordinances, decisions); comparative and national
studies, ratings, reports, and databases of international organizations such as the World Bank, the OECD, the EC,
the World Economic Forum and the Institute for Management Development MTITC; Studies and positions of the
Economic and Social Council of the Republic of Bulgaria, the Bulgarian Industrial Association (BIA), the
Bulgarian Chamber of Commerce and Industry, Bulgarian Industrial Capital Association, other business
associations and NGOs.

3
  
derogat generalis). This allows for special laws to contain provisions that contradict the
principal rules contained in common laws, and actually to revoke them. Regarding regulation,
LARACEAA is a common law setting the most general principles of regulation. The particular
application of these principles in different economic branches— for example energy, commerce
and manufacturing, etc.—is subject to other special laws. For instance, the Law on Energy
provides a licensing regime for energy producers with over 5 MW of installed capacity. In this
case, the licensing requirements under the Law on Energy shell comply with the provisions of
LARACEAA. Practically, though with lower legal status, the Law on Energy’s regulations can
revoke LARACEAA’s general provisions (e.g. by containing rules that contradict
LARACEAA’s general principles).
Ex-ante Assessment of the Act is missing. An ex-ante assessment of the Act was not done.
This is the reason why the goal, objectives and the related performance indicators were not
initially articulated in a clear way. The base values of indicators were not determined, either.
In the ideal case, the ex-ante assessment contains a set of goals, objectives and performance
indicators by which progress is measured, as well the base values to which impact effects are
compared. In the current case, the set of goals, objectives and indicators is constructed
subsequently and serves as a basis for determining and estimating the effects and benefits of the
Act.
EU Accession had a special impact on the Bulgarian economy as it required introduction
of many new regulations. The LARACEAA ex-post impact assessment covers a specific
period of development of the national economy, notably its transition from associate to full EU
membership. On the one hand, an adjustment had to be made of a great number of regulatory
regimes, stemming from Bulgaria’s integration with the EU and its acquis communautaire. It
is well known that the EC requirements play a significant role on the amount of the
administrative costs.6 On the other hand, however, there was a strong pressure and growing
demand for optimizing the role of the public administration in economic activity and reducing
the regulatory burden on businesses. During the analyzed period, therefore, the regulatory
environment framework and the public administration were subject to the influence of mutually
contradicting factors, which inevitably resulted in inconsistency of the achieved results.
Performance monitoring system with concrete indicators to evaluate the administrative
and regulatory burden in Bulgaria is missing. Discussions about the reform of the
regulatory regimes started about a decade ago. Projects of the Department for International
Development of the UK and the World Bank on reducing the administrative barriers to business
were initiated at that time. In fact, the adoption of the LARACEAA has been one of the
performance benchmarks of the World Bank's Second Programmatic Adjustment Loan to the
Government of Bulgaria, which observed Government accomplishments by end 2003. The
establishment of the first entrepreneurs’ desks in the municipalities of Vidin and Pazardjik is a
result of the efforts of the UK Agency. However, the performance monitoring system is still
underdeveloped in Bulgaria. That makes it difficult to assess the impact of the Act since 2004.
For instance, a number of estimations of overall regulatory burden have been provided annually
by different sources. Sometimes the measurements differ due to different methodologies used
to estimate the same phenomenon.7 In addition, there are no estimations of the administrative
6
By applying the Standard Cost Model, the Swedish Agency for Economic and Regional Growth calculated that
this impact consists in 99 percent regarding the administrative cost in the food industry and 73 percent in
agriculture (see NRR, 2008).
7
For instance, one World Bank study shows that proceeding from the “least favorable” to the "most favorable"
quartile on a ranking of the regulation of business activities leads to an additional annual growth of 2.3 points of
GDP (see Djankov, S., et.al., 2006). European Commission studies show a smaller impact on GDP growth
resulting from reduced regulations. According to a research by the EC, if measures to reduce the administrative
burden by 25 percent were applied in all EC counties (as per Lisbon objectives), the GDP would increase between
1.1 percent and 1.9 percent, depending on applied models. A simulation of the model QUEST shows an increase
of the GDP by 0.3 percent in 2020, and this increase could be as much as 0.7 percent if markets are sufficiently
flexible and competitive. A simulation of another model (WorldScan) shows an increase of 0.6 percent by 2020
for the EC. (EC, 2007). Furthermore, the Bulgaria Convergence Program 2009-12 (2010) lists two different
4
  
burden on economic activity in Bulgaria based on accepted methodologies, like the Standard
Cost Model.8 Therefore, it is very difficult to evaluate the impact of the Act on the level of
administrative burden in Bulgaria since 2004.

1.5 Structure of the Report

The following Chapter II of the report presents the background of the LARACEAA and the
assessment. It defines a policy framework, a goal and objectives of the Act and it presents a set
of performance measurement indicators used. Chapter III depicts the results of the ex-post
impact assessment. The first subsection provides additional analyses on government measures
for limiting administrative burden on businesses, various institutional initiatives, Impact
Assessments (IAs) and training, as well as legislative improvement. The chapter combines
quantitative and qualitative methods for the analysis. The supplementary qualitative methods
are based on: (i) a survey of key stakeholders on the accomplishment of LARACEAA’s goal,
objectives and main tools for attaining the objectives, and (ii) a unique study on
implementation of four regulatory regimes at the local level. The second subsection presents
status and dynamics of outcome indicators, output indicators and results indicators. Main
findings of the IA are summarized at the end. Based on the ex-post impact assessment of
LARACEAA, the final Chapter IV identifies the main problem, discusses underlying drivers
and effects of the problem and proposes key recommendations to improve the Act in three
particular areas: instrumental, institutional and economic.

assessments of the impact of the reduction of the administrative burden on businesses. According to the first
assessment, the reduction of regulatory burden by 20 percent will result in an increase of 0.72 percent of GDP
until 2025, and the respective figure of the second assessment is 1.44 percent. In the more distant future, to 2055,
as per NRR study (2009), it has been calculated that the increase of the GDP over the period will be 1.6 percent.
Still, others have calculated that “...companies in member states which have not implemented comprehensive
programs for reforming their regulatory frameworks—such as Bulgaria—would incur direct costs of 10-15 percent
of GDP” (see Jacobs & Associates and Institute of Market Economics, 2009). This estimate, however, does not
include reduced effectiveness of the economy.
8
The use of the Standard Cost Model is also recommended by the European Commission (see EC, 2009).

5
  

CHAPTER II 
BACKGROUND OF THE ASSESSMENT
The second chapter outlines a policy framework by discussing
coherence with the Governmental and European Union (EU) policies,
as well as relevant general and specific documents on regulatory
reform, followed by analysis of the goal and objectives of the Act, and
identification of performance indicators for the measurement of the
impact of the Act.

2.1 Policy Framework

The better Regulation Policy is a major priority of the EU, as it is an important factor for
reaching the targets of the Lisbon Strategy. Improvement of regulations aims to promote the
public interest in a way that supports rather than hinders the development of economic activity.
Regulatory frameworks and conditions created for business development by the state are
among the main factors affecting business activity and economic growth. In 2002, the EC
started a large-scale program for improving administrative regulation. The EU member-states
initiated a series of activities and measures to improve business environment and the quality of
new legislation to raise the competitiveness of the European economy.

Reducing interference of the state are what the EU countries’ legislative programs
encourage. The principle underlying the legislative programs of the EU countries is the
reduction of interference by the state; if interference is inevitable, regimes are graduated in
direction from the “heavier” to the “weaker” (see Figure 1).

Figure 1: Escalator of Regulatory Regimes 
Highest costs

licensing
Regulatory Costs

permission

registration

notification
0

Control Freedom

State Intervention

Source: Authors’ graph. 

The heaviest regime (in terms of state interference) would be licensing whereas the weakest
regime would be notification (see Figure 1). Within the EU, alternative forms, such as “co-
regulation” and “self-regulation” by business are also considered as "Better Regulation."

The EC launched a new ambitious program for reducing unnecessary burden. In 2006,
the EC launched a more ambitious program of reducing unnecessary administrative burden
resulting from the existing legal structure of the EU based on the new Lisbon Strategy. A year
6
  
later, the European Council approved a Community target of reducing administrative burdens
by 25 percent until 2012.

To meet the target of the new EC program, Bulgaria developed national programs with
measures to reduce administrative barriers and to facilitate creation of supportive
business environments. Bulgaria developed two particular programs to address the new EC
initiative in the area of Better Regulation, namely the National Reform Program (2007–09) and
the Better Regulation Program (2008–2010) discussed below.

The National Reform Program (2007–09) was a main strategic document of the Bulgarian
Government, having an impact on measures to improve the business environment. The
document aimed at systemizing the efforts of public administration, the NGOs and social
partners in reforming the Bulgarian economy to achieve sustainably high rates of economic and
employment growth. This was the first National Reform Program (NRP) for Bulgaria
presented to the EC and the other member-states in March 2007. The starting points for the
program were the Integrated Guidelines for Growth and Employment recommended by the EC
in formulating policies and measures to achieve the targets of the Renewed Lisbon Agenda. In
fact, the NRP was developed in response to the challenges posed to the EU member-states by
the Renewed Lisbon Strategy. The NRP is a strategic document defining a medium-term
framework of measures and priorities in the fields of macro- and micro-economic development,
the labor market and human capital development. In fact, improving the business environment
was one of the specific priorities of the NRP. Actions of the Government were directed at
setting and strengthening good governance principles by finding the optimum ratio between
administrative regulation and simplification of certain administrative regimes. The objective
was to reduce the time required for issuing business licenses and permits. The NRP envisaged
improvement of the business environment in two main areas: good governance in public
administration and reducing administrative and regulatory barriers to entrepreneurship.

Another more specific program is the Better Regulation Program (2008–10). In 2008, the
Council of Ministers (CoM) approved the Better Regulation Program 2008–2010, directed at
achieving sustainability of the process of building a good regulatory environment. The goal of
the program was to reduce administrative barriers to business and to improve administrative
regulation. It was expected that the program results in building an environment of better
regulation in Bulgaria, in the context of the EU Lisbon Strategy, through the National Reform
Program (2007–2009), the Investment Encouraging Strategy (2005–2010), and the National
Small and Medium Enterprises Promotion Strategy (2007–2013).

The measures of the Better Regulation Program aimed to contribute to developing a regulatory
system with low expenses and small risk, thus supporting the national competitiveness and at
the same time efficiently protecting public interests. To attain this objective, Bulgaria needed
to build the required capacity in compliance with best European regulatory practices.

To reduce administrative barriers to business and to improve administrative regulation four

objectives were specified by the Better Regulation Program 2008-10, namely:

 Abolition or simplification of administrative regimes;

 Establishment of an institutional structure for implementation and control of Better
Regulation Policy;
 Acceleration of the dialogue with interested parties;
 Regulatory improvement at the municipal level and strengthening of regional and municipal
capacity for good regulatory practices.

Concrete measures were developed to attain the program’s objectives. Regarding the first
objective, the envisaged measure involved systematic reviews for elimination of administrative
barriers and improvement of regulation of economic activity in close co-operation with
7
  
stakeholders. As an initial step in this direction, concrete administrative regimes are identified
to be abolished and simplified after proposals by business associations.

The program also envisaged a measure related to Bulgaria’s commitment to the EC

Action Program for reducing unnecessary administrative burdens stemming from the
existing legal structure of the EU. Abolition or simplification of administrative regimes,
implementation of alternative regulation and reduction of administrative burdens had to take
into account the role of the state in protecting national security and public order, and its explicit
and sovereign rights stipulated by Art. 18, para. 1–4, of the Constitution of Republic of
Bulgaria, as well as the necessity for protecting the personal and property rights of citizens and
legal persons, and of the environment. Part of the measures under the Better Regulation
Program regarded activities related to the integration of administrative services on the principle
of “episodes of life” and “business events” so as to ease and simplify access to and delivery of
complex services.

Reforming regulatory regimes was/is given particular attention in other national strategic
documents as well. Such strategic documents are the National Strategic Reference Framework
(NSRF) 2007-2013, the Convergence Program 2009-2012, Operational Program
“Administrative Capacity” (OPAC) (2007-2013), the Electronic Government Strategy, the
Medium-term Fiscal Framework 2010-2013, Bulgaria Investment Encouraging Strategy (2005-
2010), and the Government’s European Development of Bulgaria Program (2009-2013). These
documents also envisage measures and activities aiming at improving the business climate and
reducing administrative barriers to economic activity. For instance, Priority 3 of the NSRF
2007–2013 is “Promotion of entrepreneurship, favorable business environment and good
governance.” Strategic priorities set by NSRF are further developed in seven National
Operational Programs. In fact, part of the funds under Operational Program “Administrative
Capacity” (OPAC) are planned to cover the fulfillment of Priority 3. It needs to be further
specified that achieving the targets of NSRF is envisaged by a set of measures grouped into
four priority axes. Priority Axis III is defined as “High-quality administrative services and
development of electronic governance.” Beneficiaries under the program include central,
regional and municipal administrations; the judicial system; NGOs; and structures of the civil
society. Further, by adopting the Strategy on the Electronic Government9 in 2002, the
Government undertook to provide 20 main administrative services electronically, including 12
services for the citizens and 8 services for business. The same are approved by the EC as
indicative for the development of electronic government. The strategy was updated in 2006.10

The current Government continued working on regulatory reform. The present

Government undertook measures on optimizing the administration and reducing the
administrative burden. This is discussed by the World Bank (2010b) report on Administrative
and Regulatory Barriers to Business.11 Particular measures to improve the business
environment are envisaged also in the Program of the new Government, entitled European
Development of Bulgaria (2009–2013).12

As envisaged by the Convergence Program 2009–2012, the current Government plans to

undertake an elimination of 136 administrative obligations, thus contributing to a saving of
EUR 13 million by business. Moreover, a 20 percent reduction of administrative burden,
which is targeted, would result in a 1.44 percent growth in GDP by 2025.13

9
Decision № 866/ on December 28, 2002 of the CoM (2002a).
10
Decision № 482/2006 of the CoM.
11
See more details about current government measures in World Bank (2010a)
12
See (__2009a).
13
Convergence Program 2009-2012 (2010).
8
  
The Medium-Term Fiscal Framework 2010–201314 adopted by the CoM also contains
measures on improving business environment, creating favorable conditions for development
of business and encouraging investments in Bulgaria. Measures related to the business
environment include:

 Review and bringing into compliance of all existing regimes with regard to their lawfulness
and appropriateness;
 Review and determination of real rates of fees paid for licensing, permission, etc.;
 Reduction of quasi-taxation burdens through liberalizing product market regulations as a
precondition for diminishing corruption and the influence of special interest groups;
 Increase the productivity of public expenditures and the quality of goods and services
delivered by the state.

Overall, Bulgaria follows the EU policy on Better Regulation Agenda, and as a result has
adopted several strategic and specific programs to address the issue since 2004. However,
impact of the regulatory reform policies is yet to be seen. In recent years, the Bulgarian
Government has adopted several national and more specific programs, targeting reduction of
the administrative burden and relief of regulatory barriers for firms to address the Lisbon
Strategy of the EU. But implementation of the provisioned measures is ambiguous. The
current Government has also planned activities to improve the business environment.
However, results from the impact of these policies are yet to be seen.

The next subsection discusses in brief the goal and main objectives pursued by the Act in order
to provide the ground for the selection of performance indicators used to assess the impact of
the Act both in qualitative and quantitative terms.

2.2 Goal and Objectives of the Act

LARACEAA establishes the general rules of limiting administrative regulation and
administrative control of economic activity. The Act’s goal (or general objective) is to place
publicly justified limits on administrative regulation and control of business and to raise the
national competitiveness.

LARACEAA is the first significant legislation in Bulgaria that aims to define the acceptable
limits of administrative regulation and control on business. So formulated, the rational of the
Act stems from the liberal idea of the “limited” state which, as laid down in the motives of the
Act, “limits and controls itself in favor of business and public society.”15

The Act identifies a public interest in three major areas of regulation of economic activities
(Art. 2, LARACEAA), namely:

 National security and public order (sovereign rights of the state);

 Personal and property rights of individuals and legal persons;
 Environmental protection through regulated economic activity.

Going beyond these limits means overregulation and over-control (i.e. publicly unjustified
burdening of economic activity), according to the Act.

This self-limitation of public power represented by public authorities and local governance
bodies is in full conformity with the spirit of Art. 19, para. 1 of the Constitution of Republic of
Bulgaria. It proclaims the right to free economic initiative as a basis of the national economy.

14
Decision № 705/ on August 31, 2009 of the CoM.
15
See CoM (2002b).
9
  
This means that freedom of economic activity is the rule and any kind of restriction is an
exception to the rule. The socio-political as well as the legal-and-regulatory logic demands that
exceptions to the rule are regulated, interpreted and applied restrictively and not extensively.
Imposing limits on intervention by public authorities in business activity does not mean such
interventions are abolished; it does mean that interventions must be precise, reasonable, and
acceptable from the viewpoint of modern society. In addition, it should be taken into account
that LARACEAA does not cover the whole range of relationships between the business
community and the state administration. This Act cannot be identified as an administrative-
economic code. As underlined above, the Act’s goal is to establish clear principles for
introducing and implementing restrictive administrative regimes in economic activity.
Therefore, all daily administrative relationships regulated by the Administrative Procedure
Code and many other special laws remain beyond the scope of LARACEAA.

Several major objectives pursued by the LARACEAA are identified:

 Protect free economic initiative;
 Clearly outline the limits of administrative intervention in economic activity at central and
local levels;
 Restrict and reduce publicly unjustified burdening of economic activity;
 Provide clear definition of the types of regimes regulating economic activity;
 Increase transparency in the introduction of regulatory regimes;
 Limit the informal economy by reducing the administrative burdens on legitimate
economic activity;
 Limit the enactment of new regulatory regimes (licensing or registration) by requiring
evidence of the necessity for such a regulation and advance notification of affected
persons;
 Eliminate normative requirements that are likely to reduce competition;
 Reduce the sources of corruption by limiting the discretionary power of administrative
agencies and officials;

Ensure publicity in the work of administrative authorities in applying regulations and controls
on economic activity, as well as of the reasons for such actions.

2.3 Performance Indicators of the Assessment

The definition of performance indicators follows the division of the objectives in two
groups, namely: goal and a set of objectives. The goal represents the long-term effects and
impacts of the regulation on the direct target groups and other interested parties (see Table 1).
The specific objectives represent the more immediate results and effects of intervention on the
respective target groups. That is why the specific objectives have a more apparent and
measurable nature compared to the broader goal. Another substantial difference between the
two groups of objectives is that while reaching the objectives is related to a particular
intervention resulting from a concrete law or specific programs, the attaining of the goal is
influenced by a much wider set of laws, programs or an aggregation of special interventions.
Due to the different contents and role of the goal and objectives, there are essential
differences in selecting and formulating indicators for their measurement. Indicators for
measuring the goal are related to the general state-of-affairs and estimations of the country’s
competitiveness, ease of doing business, and administrative burden. The indicators identified
in Table 1 represent an ideal set that might be modified in every concrete situation and country
as per availability and reliability of statistical information. In a more uncertain situation it
would be better to complement quantitative indicators with qualitative analysis mainly gathered
from surveys, case studies, and interviews, as demonstrated in this report.

10
  
Table 1:  Performance Indicators of the LARACEAA's Ex‐post Impact 
Objective Effect Type of Indicators Source of
Information
G To establish publicly justified limits O
O on administrative regulation and U Quantitative Indicators
A control of business and to raise the T
L national competitiveness. C 1. GDP growth rate NSI, World Bank –
O 2. Competitiveness indices Doing Business,
M 3. Ease of doing business indices WEF, IMD, OECD,
E 4. Administrative burden indicators Standard Cost
Model

Qualitative Indicators

Perceptions of key stakeholders Survey

on achievement of the goal
1. To protect free economic I
initiative N Quantitative Indicators
2. To clearly outline limits of P
administrative intervention in U
O economic activity at central and T, 1. Regulatory burden National
B local levels 2. Legal framework efficiency Statistical
J 3. To restrict and further O 3. Level of bureaucracy Institute, Business
E reduce publicly unjustified U 4. Ease of doing business Environment and
C burdening of economic activity T 5. Share of time spent in dealing with Enterprise
T 4. To provide clear definition P regulations Performance
I of the types of regimes regulating U 6. Financial expenses of the business Survey (BEEPS)
V economic activity T, to cover administrative burden and World Bank
E 5. To increase transparency 7. Share of firms identifying Enterprise Survey,
S in the introduction of regulatory & regulatory regimes as major Doing Business,
regimes constraint OECD, CoM, MF,
6. To limit the informal R 8. Number of regulatory regimes – National
economy by reducing administrative E total and by type Assembly,
burden on economic activity S 9. Share of informal economy Register of
7. To limit the enactment of U 10. Corruption level indices Regulatory
new regulatory regimes (licensing L 11. Number of electronic services Regimes
or registration) by imposing the T 12. Number of regulatory regimes with
requirement for evidence of the S public registers
necessity for such a regulation and 13. Number of abolished regulatory
advance notification of affected regimes
persons 14. Number of simplified regulatory
8. To eliminate normative regimes
requirements likely to restrict 15. Number of IAs of implemented
competition regulatory regimes
9. To reduce corruption by 16. Administration work transparency
limiting the discretionary power of indices
administration 17. State and municipal taxes collected
10. To ensure publicity of the for business services
work of administrative authorities in 18. Costs of regulation performing
applying normative acts related to administration
administrative regulation and 19. Number of employed in
control of economic activity, as well administrative services.
as of the motives for their change.

Qualitative Indicators

Perceptions of key stakeholders on Survey, Case

achievement of the objectives. Studies,
Interviews and
Discussions.

Source: Prepared by the authors.   

11
  

Outcome indicators

The outcome indicators relate to the achievement of the goal. They concern the wider effects
of the policy and go beyond the direct and immediate influence on target groups. They
comprise long-term effects on the economy, social activities and ecology. Such indicators are
as follows: (i) Indicators of economic impacts (GDP growth rate, indices of competitiveness,
ease of doing business indices, administrative burden indicators); (ii) Indicators of social
impacts (employment and labor markets, social involvement, indices of good state governance
and administration, publicity and awareness, and civil control of the activity of public
authorities); and (iii) Indicators of ecological impacts (regulatory regimes related to
environmental protection and sustainable development).

Depending on the logic of intervention, indicators for measuring the specific objectives can be
grouped as follows:

Input indicators

These indicators provide information on the financial, human, material, organizational or

regulatory resources necessary to implement the policy. This group of indicators includes, for
example, costs of central and local administration involved in regulation, the number of people
employed in administrative services, etc.
Output indicators

These indicators relate to the immediate results expected to be produced (or, services to be
delivered) by implementing the policy. Such immediate results include:
 number of abolished regulatory regimes;
 number of simplified regulatory regimes;
 number of regimes abolished at the municipal level;
 number of implemented electronic services;
 others.

Results indicators

These indicators reflect the immediate effects of policy on target groups, beneficiaries and
those who are directly addressed by the policy. This group of indicators includes:
 financial expenses paid by businesses to comply with regulations;
 time spent by businesses to comply with regulations;
 administrative burdens;
 time needed to deliver administrative services to businesses;
 others.

12
  

CHAPTER III 
EX-POST IMPACT ASSESSMENT OF THE LARACEAA
The third chapter puts emphasis on the ex-post impact assessment of
the LARACEAA. It first discusses specific initiatives of the Bulgarian
Government on reduction of administrative regulation and control by
specifically addressing administrative and regulatory burden-
reduction measures, institutional initiatives, conducted impact
assessments, analyses and training and legislative initiatives for the
period between 2004 and 2009. Then, it embarks on issues of state and
dynamics of impact assessment indicators. The first subsection
provides additional analyses in order to overcome the limitations of the
ex-post assessment. These supplementary analyses are based on: (i) a
survey of key stakeholders on the LARACEAA’s accomplishment of its
goal and objectives, and (ii) case studies of four regulatory regimes at
the local level. The second subsection presents results on outcome
indicators, output indicators and results indicators. Input indicators
are not analyzed as per general limitations of the assessment discussed
earlier. Finally, the chapter summarizes main findings and
conclusions.

3.1 Government Measures and Initiatives

Since 2004, the Bulgarian Government has initiated a number of actions to modernize business
regulation. However, these actions have had only partial effect and they have not guaranteed
orderliness and stability of the process of creating a better regulatory environment.
Undertaken initiatives in the area of Administrative and Regulatory Reforms can be
systematized in the following groups:

 Administrative and regulatory burden-reduction measures;

 Institutional initiatives;
 Conducted impact assessments, analyses and training;
 Legislative initiatives.
3.1.1 Administrative and Regulatory Burden-Reduction
Measures
According to the first annual report for the implementation of the Better Regulation Program
for the period 2008–2010, a total of 25 administrative regimes were proposed for abolition and
simplification until April 2009. In co-operation with the interested parties, another 17
administrative regimes have been identified to be abolished or simplified. To improve
regulation at the local level, a review of introduced administrative regimes has been done as
well. As a result, 167 municipal regimes were abolished within one year. Specific information
about the status of the regimes under the Better Regulation Program and Implementation of the
Measures under the Better Regulation Program by April 2009 can be found in Appendix 2 and
Appendix 3.

13
  
Accomplishments of the Better Regulation Program 2008–2010 on Abolition and Simplification
of Administrative Regimes:

Results regarding simplification and removal of unnecessary regulatory regimes are

mixed. During the period under consideration, reviews have been done of administrative
regimes and barriers to economic activity in cooperation with interested parties (employers’
organizations, branch associations, etc.). As a result, a list of regimes for simplification and
abolition has been drafted. On the approved list of 16 out of 17 identified administrative
regimes, the CoM has adopted the simplification of twelve regimes and five regimes for
abolition, but the national parliament has not yet approved these proposals. In addition, the
“Registration of a commercial establishment” regime introduced illegally in 140 municipalities,
was dropped in 110 of them by March 2009; and 30 municipalities continue to apply this
regime. Two of the identified regimes shall not be simplified, since it is considered that they are
related to stringent regulation. These regimes are “Licensing of activity as commodity
exchange” and “Permission to organization on waste utilization.” Another regime, “Licensing
of operators of airport ground operations,” will not be simplified, since consultations with the
EC have confirmed the necessity of the regime. Three other regimes, including “Permit of
performance of activities including collection, transportation, temporary storage, preliminary
treatment, utilization and/or rendering harmless of waste,” “Permit of performance of taxi
transportation” and “Permit of performance of occasional transportation” are envisaged for
consideration by the CoM.

Consultations with business associations have been conducted, but more needs to be done.
For the time being, only consultations with representatives of business associations have been
used in identifying regimes for further simplification. A more precise hands-on alternative
method to this practice is the suggested analysis of the compliance of regimes with the main
criteria stipulated by LARACEAA (see Appendix 1). By applying this method, this study
identified nine regimes that do not meet entirely the requirements of these criteria. This group
includes the following regimes: customs agent activities; manufacturing of compact disks
(optical disks) and/or matrices for them; industrial processing of tobacco and production of
tobacco products; and production of alcohol, distillates and alcoholic beverages. This analysis
may be very helpful in determining priority regimes to be considered and suggested for
simplification in the future work of the Better Regulation Program.

Limited number of alternative forms of regulation has been introduced. An alternative

form of regulation was introduced in practice in early 2009, when the Ministry of Interior
implemented a provision that road accident findings can be filled-in by citizens without the
interference of police authorities. Another example is related to adoption of the Law on
Independent Evaluators.16 The regulation of the activity of independent evaluators has been
transferred to a professional organization, the Chamber of Independent Evaluators. This action
is part of a measure on transferring certain regulatory functions, such as license regimes, to
branch organizations. The constituent assembly of the Chamber was held in March 2009.

Licensing regimes slightly increased since 2003. In spite of undertaken measures, licensing
regimes increased during the analyzed period from 39 to 42 (see Figure 2), which resulted from
the implementation of five new regimes and the abolition of two regimes. Seven amendments
and supplements have been made to six regimes throughout the period. Most intensive was the
establishment of new regimes in 2009, when three regimes were implemented, while abolished
regimes (one in a year) refer to 2004 and 2007, respectively (see Figure 3).17

16
Promulgated SG 98/ November 14, 2008.
17
In 2007, the Bulgarian Industrial Association has conducted a study on the illegal enforcement of regulatory
regimes in Bulgaria. They concluded that 1 licensing regime has been illegally applied by the central
administration, while the local administration applied illegally 60 licensing regimes. The same was valid for about
14
  
Figure 2: Small number of licensing regimes amended since 2003 

45

40

35

30

25
total number
20
amended

15

10

0
2003 2004 2005 2006 2007 2008 2009

 Source: Authors’ estimates, based on the amendments of the LARACEAA. 

Figure 3: A few licensing regimes introduced and very few abolished since 2004 

new
1
abolished

0
2004 2005 2006 2007 2008 2009

‐1

Source: Authors’ estimates, based on the amendments of the LARACEAA. 

Regarding the implementation of electronic services, analyses show that these may be an
efficient tool for reducing administrative burdens. However, the practice in implementing
electronic services has demonstrated weaknesses, as follows:
 Services are developed according to the internal rules of individual institutions, making it
difficult for them to become an integrated part of a single e-service environment.
 Working processes of services are designed to be comfortable for the administration, not
for the consumers;
 There is a lack of a nation-wide model of rules for working with electronic documents.

190 registration regimes applied by the central administration and about 370 registration regimes by local
administrations, whereas about 750 permission regimes were applied illegally by local administrations. However,
more recent data on application of regulatory regimes is lacking. Therefore, this report uses information only about
licensing regimes.
15
  

To overcome these weaknesses, the Government has undertaken the following steps:
 The adopted Law on Electronic Governance (LEG)18 provides for automatization of
administrative procedures, transparency of processes in state administration,
reduction of possibilities for corruption as well as reduction of administration costs.
LEG stipulates the single creation and multiple uses of data, the obligation for inter-
institutional exchange of e-documents, mutual compliance of information systems and
information security. The Law also aims to reduce the time of delivering administrative
services to citizens and business. The LEG has created grounds for a substantial reform in
administration’s use of new information technologies and joint use of hard-copy and
electronic documents;
 An integrated system of e-government is being built with the aim of providing a
model for integrated e-governance at regional and central levels. The e-government
portal has been created, www.egov.bg. This is the contact point for access to all e-services
delivered by central administration. The system offers a centralized approach to managing
documents, operation processes, contents and policies. A special chapter contains a
catalogue of regulatory regimes by type;
 A pilot integration system of electronic region (PISER) has been initiated which aims
to build infrastructure for assisting the institutions in three regions (Bourgas,
Dobrich and Stara Zagora) to more efficiently manage their activity and deliver
administrative services electronically (see Box 1).Standardization of services and
processes has been introduced to improve public access to administrative services. State
authorities created a single place for access to administrative services on the principle of
“one-stop shop.” “One-stop shop” services have been introduced by 77 percent of central
administration structures, 96 percent of regional and 82 percent of municipal
administrations.19
Box 1: Establishment of a Pilot Integrated System of an Electronic Region 

In accordance with the project Pilot Integrated System of an Electronic Region (PISER), three electronic
regions have been established in Burgas, Dobrich and Stara Zagora. The so-called “regional portals” are the
basis of the project; they provide opportunities for citizens and business to electronically request and receive
services, provided by their regional and municipal administrations. This opens a “door” toward an
administration capable of operating 24 hours a day, 7 days a week.
The developed program solution provides opportunities for the establishment of a connection between the
different administrative services and the different sources of information on the basis of a standardized
interface.
On the three pilot regional portals, the citizen and business can find information about 100 services provided
by their regional administrations, accompanied by a detailed description of the normative framework, the
procedures and execution terms as well as the necessary templates and forms. Each municipal administration
included in the project provides five services via its regional portal.
Over 200 transactions have been carried out between the start of the three regional projects in September
2006 and the end of March 2009. On average, the portals are visited by 350 users daily.
Source: MSAAR (2009). 

3.1.2 Institutional Initiatives

The Council for Economic Growth (CEG) became an important consultative forum on
Better Regulation. The CEG, established during the analyzed period and presided over by the
Minister of Economy, became an important public-private consultative forum. The Council,
together with experts from the Ministry of Economy, has developed measures for
implementation of the principles of Better Regulation adopted by the CoM on August 3, 2006.

18
Promulgated SG 46, 12.06.2007
19
MSAAR (2009).

16
  
One of the key measures was the introduction of a clear relationship between the executive
agencies and the business associations in the implementation of the Better Regulation Policy.
The measures would introduce the practice of analyzing and monitoring—through ex-ante and
ex-post regulatory impact assessments—legislative drafting and enforcement issues that would
create problems for economic entities.20

Close cooperation between the Bulgarian Government and the World Bank resulted in
Bulgaria’s recent progress in the area of regulatory reform. The World Bank supported the
Bulgarian Government through analytical and advisory work in the regulatory reform area.
The first joint World Bank and Ministry of Economy and Energy report analyzed
administrative procedures in three sectors of the economy—tourism, food, and road
transportation—calling for reduction and simplification of certain administrative regimes that
are burdensome. It emphasized superfluous regulation at the municipality level as well.
Another report, Bulgaria’s Policy for Regulatory Reform in the European Union: Converging
with Europe’s Best Regulatory Environments, recommended a national nine-step strategy that
was approved by the Council for Economic Policy on October 19, 2007. These two reports,
and the consultation process with other line ministries, business associations and think tanks,
actually paved the way for the Better Regulation Program 2008–2010, approved by the
Bulgarian Government in April 2008. Another World Bank report from June 2009 called for a
systematic, fair, and transparent regime of state fees. The report noted that there is no policy in
place regarding the setting of state fees; this is one reason for the “wild” development of tariffs
that include state fees, additionally burdening business, especially small and medium
businesses. The report further indicated that the legal framework for the regime of state fees is
insufficient, and there is weak institutional framework to monitor the setting and approval of
state fees. Implementation of key recommendations is yet to be seen.

Better Regulation Unit was created. The Better Regulation Program 2008–2010 provided for
establishment of the Better Regulation Unit, which was also advised by the World Bank. With
amendments to the Rules and Procedures of the CoM and its administration, adopted in
February 2009,21 the Strategic Planning and Management Directorate assumed the functions of
coordinating the implementation and reporting of the Better Regulation Program, and the
Directorate began to execute the functions of a “Better Regulation Unit.” Few months later,
after the new government came in power, the new Rules and Procedures of the CoM and its
administration assigned these functions to the CoM’s Economic and Social Policy Directorate,
as of October 2009. A second review of the Program is forthcoming with the purpose of taking
into account the new realities and new governmental priorities.

Internet portal for consultation was launched by CoM Administration. Responding to the
needs and the understanding that the dialogue with stakeholders is of key importance for the
successful implementation of most of the measures in the Better Regulation Program,
immediately after the adoption of the Better Regulation Program an internet portal was
launched for public consultations: www.strategy.bg. The requirement was adopted for all draft
legislation related to administrative regulations to be uploaded to the site at least 30 days before
their inclusion in the agenda of a meeting of the CoM.

Even before the internet portal for consultations, an Administrative Register was
established. Before the portal, a Register of Administrative Structures and Acts of the Public
Authorities has been created.22 Although still accessible, this Register is no longer updated.
Another newly established Register (www.egov.bg) has been developed, as mentioned above.
It is much better organized technically, but there are many issues in terms of its updating.

20
For more information about the role of the CEG and other policy initiatives, see World Bank (2008) or Policy
Note on Private Sector Development in World Bank (2010b).
21
See CoM’s Rules and Procedures and its administration, SG, No. 10/2009.
22
See www1.government.bg/ras/regimes/index.html.
17
  

The new Government maintained the reform. An Administrative Reform Council was set
up to deal with Administrative Reform, including reduction of the administrative burden.
An Administrative Reform Council has been established by CoM decision in August 2009.23
The Council is headed by the Deputy Prime Minister and Minister of Finance, and the Deputy
of the Council is the Minister of Labor and Social Policy. In November 2009, the Government
adopted a Regulation on the organization of the activity of the Council. The goals of the
Administrative Reform Council are to: (i) contribute to the governmental policy on
strengthening and developing the public administration; (ii) propose strategic directions; and
(iii) coordinate draft regulatory acts on establishment, reorganization and termination of
administrative structures, administrative reform at local and district levels, administrative
services, e-government, status of civil servants and human resource management in the public
administration.

The new Bulgarian Government continued cooperation with the World Bank in the area
of regulatory reform. The CoM Administration continued working with the World Bank on a
study to analyze administrative and regulatory barriers to business. The report will come out in
July 2010 and is based on a survey of over 300 firms in Bulgaria; it has been commissioned by
the Bulgarian counterpart, using a survey methodology devised by the World Bank.24

3.1.3 Conducted Impact Assessments, Analyses and

Trainings
EU supported the Better Regulation Agenda in Bulgaria through funding an initiative by
the CoM Administration. Through Operational Program Administrative Capacity, EUR 1.25
million have been granted to the CoM’s “Better Regulation Unit” to perform 14 regulatory
impact assessments.25 Within the framework of this project a methodology for performance of
legislative and strategic impact assessment was elaborated and adopted by the CoM.26 Training
sessions also started for the experts from the Directorate and from the central and territorial
administration units. Gained knowledge and skills will help the experts from CoM’s Economic
and Social Policy Directorate to provide methodological assistance to their colleagues from the
public institutions to carry out impact assessments.27

The Ministry of Economy and Energy also supported the Better Regulation Agenda
through a pilot study. A consultancy consortium conducted a review of the national
legislation for the Ministry of Economy and Energy between August 2008 and May 2009
(2009b). It identified 398 obligations for provision of information, stated in 33 laws and
respective secondary legislation. The total administrative costs of these obligations are
calculated at EUR 81 million and the administrative burden was calculated at EUR 51.5
million, or 64 percent of the administrative costs. The project consultants proposed a reduction
of 136 obligations for provision of information that would save business approximately EUR
13 million. This represents a reduction of the administrative burden by 25 percent for the
provision of information. Almost all of this reduction—nearly 24 percent of the 25 percent

23
See Decree №192 from 5 August 2009.
24
The World Bank reports are publicly available at www.worldbank.bg.
25
Seven ex-post impact assessments have been conducted through consultancy work on the Investments
Promotion Act, the Waste Management Act, the Child Protection Act, the Law on Drugs in Human Medicine, the
State Fees Act, the Local Taxes and Fees Act, and the Social Assistance Act. Another seven ex-ante impact
assessments have been conducted through consultancy work on the draft Act on Amendment and Supplement
(AAS) of the Law on Measurements, the draft AAS of Investments Promotion Act, the draft AAS of the Waste
Management Act, the draft AAS of the Law on Foods, the draft Act on Hydro-meliorations and Irrigation
Agriculture; the draft of AAS of the Law on Health Institutions, and the draft Law on Public Libraries.
26
Jacobs &Associates and Institute of Market Economics (2009a).
27
A total of about 250 public officials were trained to carry out impact assessments as per Better Regulation Unit’s
report covering the period between January and June 2009.
18
  
total—would result from the reduction of administrative burdens imposed by five acts: Law on
Private Security Activity, Public Health Act, Protection of Agricultural Lands Act, Law on
Tobacco and Tobacco Products, and the Social Insurance Act.

3.1.4 Legislative Initiatives

District Governors have been given additional powers to ensure that municipal
regulations conform with the LARACEAA. District Governors have undertaken several
initiatives in that regard, mainly in terms of repealing municipal regulations and sending them
before the Administrative court.

Reforms in the judicial system were initiated. With the adoption of the Commercial Register
Act28 and the Act on Amendment and Supplement to the Commercial Act,29 regarding trade
representatives and insolvency procedures, the legal and the institutional frameworks have been
established for the reforms in the judicial system. With the implementation of these measures,
the procedure on registration of traders became easier, quicker and cheaper. In addition, a draft
Act on Normative Acts has been prepared. After its adoption, the process of impact assessment
in the public administration will be institutionalized.

3.2 Status and Dynamics of Quantitative Indicators30

3.2.1 Outcome Indicators

Studies by the World Economic Forum (WEF) and the Institute for Management
Development (IMD) are used to determine Bulgaria's international competitiveness.
Within the studies conducted by WEF, Bulgaria is featured throughout the entire examined
period, while the comparative data from the IMD included Bulgaria since 2006. Due to the
constantly changing number of countries included in those studies, Bulgaria’s ranking is
represented in two ways. The first way is in accordance with the absolute spot the country
occupies during each year in comparison to other countries. The second way, entitled relative
spot ranking, is based on a calculation of the spot the country would have taken if the number
of participants included for the purposes of comparison were 100. This allows for a more
precise comparison of the country’s dynamics during the examined period.

Bulgaria’s competitiveness is low as per WEF’s ranking by both absolute and relative
spot. Bulgaria’s absolute ranking is between the 70th and 80th position, while the relative
ranking varies around the median (see Figure 4). Subsequent to a notable improvement of the
competitiveness during the period 2004-05, the dynamic of the development of this index is
negative because of the subsequent worsening of the absolute and relative ranks.

28
SG. No34/ on April 25, 2006, amended, SG, No44/ on June 12, 2009.
29
SG, No38/ on May 9, 2006.
30
The following quantitative analysis of the period after 2003 uses the performance indicators that were specified
in Table 1. Input indicators are not analyzed because of the lack of reliable data.

19
  
Figure 4: Bulgaria’s Global Competitiveness Index ranking is low and not improving 

90
80
70
60
50
rank
40
relative rank
30
20
10
0
2004 2005 2006 2007 2008 2009
 
 
Source: Global Competitiveness Report (WEF, 2004–2009). 

Figure 5: Bulgaria’s ranking by the Competitiveness Index of IMD slightly  improved 

90

80

70

60

50
rank
40
relative rank
30

20

10

0
2006 2007 2008 2009

Source: World Competitiveness Yearbook (IMD, 2006–2009). 

The IMD data shows the country is slightly improving. Bulgaria ranks between the 67th
and 77th place among the 100 countries as per IMD studies (see Figure 5). The development
dynamic of this index, however, is favourable both with regard to absolute and relative ranking.
With every passing year the country improves its position and moves closer to the average
group.

Improvements in Bulgaria's business environment are also noted in the "Doing Business"
index. Bulgaria has achieved substantial progress over the past five years with respect to its
Doing Business rankings. Although there have been some areas where Bulgaria’s relative
positions have stayed the same (e.g., protecting investors) or even worsened (e.g., number of
procedures and time to get a construction permit), Bulgaria has improved in many areas (see
Table 2:). For example, reductions in the number of procedures, the time to register, the cost of
registration, and the minimum capital requirement have made starting a business considerably
easier since 2004. Similarly, the total tax rate and the number of tax payments have been
reduced.
20
  
Table 2: Improvement of  Bulgaria’s Doing Business Ranking Since 2004 
2004 or
Indicators earliest 2009
available
Starting a Business Procedures (number) 11 4
Time (days) 32 18
Cost (% of income per capita) 10.4 1.7
Min. capital (% of income per capita) 86.7 20.7
Dealing with Construction Procedures (number) 20 24
Permits Time (days) 127 139
Cost (% of income per capita) 475.2 436.5
Registering Property Procedures (number) 9 8
Time (days) 19 15
Cost (% of property value) 2.4 2.3
Getting Credit Strength of legal rights index (0-10) 8 8
Depth of credit information index (0-6) 3 6
Public registry coverage (% of adults) 1.3 34.8
Private bureau coverage (% of adults) 0 6.2
Protecting Investors Extent of disclosure index (0-10) 10 10
Extent of director liability index (0-10) 1 1
Ease of shareholder suits index (0-10) 7 7
Strength of investor protection index (0-10) 6 6
Paying Taxes Payments (number per year) 31 17
Time (hours per year) 616 616
Total tax rate (% profit) 46 31.4
Trading Across Borders Documents to export (number) 7 5
Time to export (days) 26 23
Cost to export (US$ per container) 1233 1551
Documents to import (number) 10 7
Time to import (days) 25 21
Cost to import (US$ per container) 1201 1666
Enforcing Contracts Procedures (number) 40 39
Time (days) 564 564
Cost (% of claim) 23.8 23.8
Closing a Business Recovery rate (cents on the dollar) 33.8 32.1
Time (years) 3.3 3.3
Cost (% of estate) 9 9
Source: Doing Business 2004‐2010 (World Bank), Table adopted from World Bank (2010a). 

With regard to relative ranking, Bulgaria ranks close to the first quartile in the Doing
Business index. The Doing Business index dynamic is positive, and during the last two
examined years the country ranks in the first quartile with regard to relative ranking (see Figure
6). In 2007 Bulgaria ranked among the top 10 reformers with regard to the improvement of
conditions for doing business, although the country was ranked 46th. In 2009 the country was
not a top reformer but it was ranked 51st (see Figure 7), ahead of Hungary, Romania, Poland,
Italy, Czech Rep. and Greece. Of the new EU member countries, Latvia, Lithuania, Estonia,
Slovakia and Slovenia ranked higher than Bulgaria.

The improvements in the area of regulation have continued. For example, since the most
recent Doing Business 2010, which includes improvements through June 2009, the new
government has reduced minimal paid-in capital for limited liability companies to EUR 1 from
EUR 2,500. This emphasizes the potential for continued improvement along a number of
dimensions.

21
  
Figure 6: Bulgaria’s relative ranking by the Doing Business Index improves 

70

60

50

40
rank
30
relative rank
20

10

0
2006 2007 2008 2009 2010

Source: Doing Business Report (World Bank, 2006‐2010). 
Note: This ranking does not incorporate the recent changes in the Doing Business methodology. 

Figure 7: Bulgaria takes 51st position as per Doing Business 2010 ranking  

Source: Doing Business 2010 (World Bank, 2009). 
Note: This ranking does incorporate the change in the DB2010 methodology. 

In terms of product market regulation, Bulgaria demonstrates a good standing compared

to the EU average. Using the methodology developed by OECD experts for measuring
regulation of the product market, a World Bank team conducted a study on Bulgaria. It found
that in 2006 the country received a mark of 1.8, which ranks it between the Czech Republic and
Hungary (see Figure 8). Bulgaria still lags behind the average level of this indicator among the
15 EU member-countries and of the OECD countries, which have been represented by 2003
data.

22
  
Figure 8: Bulgaria’s Product Market Regulation Index compares well with EU‐average 

Source: World Bank (2007). 

The World Bank Enterprise Survey conducted in 2009 indicates that Bulgarian managers
do not rate requirements for licenses and permits among the most significant constraint
to their businesses. The biggest problems for Bulgarian firms are access to finance, as shown
in more than 17 percent of the answers, and the presence of the informal economy, as shown in
more than 15 percent of the answers (see Figure 9). Licenses and permits were cited as
obstacles in only 5.37 percent of the answers in 2007 and 2.09 percent of the answers in 2009.31
Figure 9: Bulgarian Firms do not rate Business Licensing and Permits as one of the top constraints in 
2009 (in percent)  

Top 10 business environment constraints for firms
20
18 17,19
15,25
16
13,28 12,81
14
12
10 8,99
8,14
8
6 4,58
3,76 3,42 3,24
4
2
0
Crime, Theft &
Corruption
Access to

Tax Rates
Informal Sector

regulations
Inadequately

Transportation

Administration
Finance

Instability

workforce
educated
Policy

Disorder
Labor
Practices

Tax

Source: BEEPS (2008 ‐ 2009) 

The surveyed managers of firms in Bulgaria report a considerable improvement of the

state of regulation during the analyzed period. In 2004, more than 23 percent of the
managers noted that licenses and permits were among the most significant constraints on the
business environment (see Figure 10). In 2008, this share decreased to below 9 percent, which

31
 Percentage of firms that chose Licenses & Permits as the biggest obstacle faced by this establishment. Survey respondents 
were presented with a card that listed 15 potential obstacles. World Bank Enterprise Survey (2007) and BEEPS (2008‐09).  
23
  
represented a notable improvement.32 From a comparative standpoint, this achievement is
remarkable, despite the fact that the tendency is not uniform over the years. For example, in
2002 this share was close to 17 percent, while in 2007 it reached 21.2 percent.33 As per this
indicator, Bulgaria is in a very good position among the Eastern Europe and Central Asia
countries as well as within the group of countries with above-average per capita income.
Figure 10: Share of companies showing  regulation as the most significant restraint to business in 
2009 (in percent) 
45
40,77
40

35 32,67
29,89
30
24,49 25,19
23,41 24,04
25
21,54
19,44 19,99
20

15

10 8,86

0
a

06
 

va

an

6
d.
ia

ia
nd
ia

vin

00

00
Fe

an
an

20
ar

do

st
la
go

 2

s 2
lg

m
n 
hu

kh
Po

e 
ey
ol
ze
Bu

ia

Ro

in

ru
M

za
Lit

rk
ss
er

ra

la
Ka
Tu
Ru
 H

Uk

Be
 &
ia
sn
Bo

Source: Enterprise Surveys (World Bank). 
Note: Percentage of firms identifying business licensing and permits as major constraint among the five points scale. The 
computation of the indicator is based on the rating of the obstacle as a potential constraint to the current operations of the 
establishment; 

3.2.2 Output Indicators

The analysis of governmental programs and reports about their implementation
yields the following results:

 A total of 25 administrative regimes have been proposed for abolition or simplification

during the period April 2008–April 2009. Another 17 administrative regimes (12 regimes
subject to simplification and 5 regimes subject to abolition), have been identified in
cooperation with the stakeholders. An overview of the implemented administrative regimes
has been conducted at the municipal level. This review found that 167 municipal regimes
have been revoked within the course of one year;
 54 electronic services of high public value have been determined and are to be
implemented by 2011;
 Three centers have been created in the cities of Sofia, Sliven and Varna to provide
assistance to customers via electronic service. A single environment has been created for
the exchange of electronic documents. The administrative e-services are to be integrated in
it so they can be provided via the e-government portal;
 “One-stop shop” servicing has been introduced in 77 percent of the structures of the central
administration, in 96 percent of the regional and 82 percent of the municipal
administrations;
32
See BEEPS (2008-09).
33
See World Bank Enterprise Survey (2007).
24
  

 The public consultations portal is located at: www.strategy.bg. All proposals for statutory
instruments relating to administrative regulation must be published on this portal at least
30 days prior to their submission to a CoM session for approval;
 A newly created register, which presents all regulatory regimes, has been established at the
following address: www.egov.bg;
 398 information obligations have been identified, which have been specified in 33 national
laws and the accompanying secondary legislation. Recommendations have been
formulated for amendments to five laws, which generate 80 percent of the administrative
burden relating to information provisions;
 OPAC has financed projects for conducting 14 assessments (seven ex-ante and seven ex-
post assessments) of the regulatory impact of important legislative acts and the work on a
report on the institutionalization of impact assessment. In addition, more than 250 officials
from the state administration have been trained in conducting impact assessments.

3.2.3 Results Indicators

Several indices that most accurately reflect regulatory conditions have been selected from
the WEF competitiveness studies. These are the indicators of the regulatory burden, the
effectiveness of the legislative framework and the transparency of policy-making. On these
indices, Bulgaria scores between 2.3 and 3.3—with the desired score being the closest possible
to zero (see, Figure 11). From a dynamic standpoint, the transparency of policy-making34
reflects worsening of the condition in Bulgaria, although the effectiveness of the legislative
framework keeps the same position. Only the regulatory burden indicator reflects dynamic
improvement. For this reason, the regulatory burden is ranked first, while transparency
receives the lowest mark (see Figure 11).

By these indices Bulgaria falls within the least favorable range of the rankings: between
80th and 120th place (see Figure 12). With respect to relative ranking, Bulgaria falls within the
second, less favorable half of the ranking—after the 60th place. The same position of the
selected indicators is taken both by points and by place within the rankings. By all of the
analyzed indicators the country is in a less favorable position of the total competitiveness
index.

Several indices, which most accurately characterize the dynamics and state of regulation,
have also been selected from the competitiveness studies of the IMD (see Figure 13). These
are the indicators of bureaucracy, ease of doing business and registration of a company (starting
a business). Of these, the index on the impact of bureaucracy reflects the best condition for
Bulgaria. The other two indices have values for Bulgaria that fall within the unfavorable part of
the graph, fluctuating through the years between 3.7 and 6, given that the maximum value is 7.
From a dynamic standpoint, only the index for registration of a firm shows a degree of
improvement over the period from 2006 to 2009, as its value is better at the end of the period
than at the beginning. The other two indices are worsening a little bit (see Figure 13).

34
The problem with transparency of policy-making is also confirmed by the 2009 ARC survey. Over half of
managers of all types of firms in the ARC Survey said that regulations are applied inconsistently and
unpredictably that led to instability in regulatory policy making (see World Bank, 2010a.
25
  
Figure 11:  Decreasing values of WEF’s  Burden of Government Regulation and Efficiency of Legal 
Framework since 2003 and Transparency of Government Policymaking since 2007 

0
2003 2004 2005 2006 2007 2008 2009

Burden of government regulation Efficiency of legal framework Transparency of government policymaking

Source: Global Competitiveness Report (WEF, 2003–2009). 

Regarding Bulgaria’s ranking according to the individual indicators, from a dynamic standpoint
the country ranks highest with respect to doing business, both in terms of absolute and relative
positioning (see Figure 14). Concerning the bureaucracy, the tendency is positive, while in the
case of registering a new company, the graph shows an elliptical trajectory and the end values
for the period equal the beginning values (see Figure 14).

Figure 12: Bulgaria’s Burden of Regulation is falling as per WEF relative ranking, while Bulgaria’s 
Efficiency of Legal Framework and Transparency of Policymaking are somewhat constant 

120

100

80

60

40

20

0
2003 2004 2005 2006 2007 2008 2009
B urden of regulation ‐ rank B urden of regulation ‐ relative rank
E fficiency of legal framework ‐ rank E fficiency of legal framework ‐ relative rank
Trans parency of policy‐making ‐ rank Trans parency of policy‐making ‐ relative rank

 
Source: Global Competitiveness Report (WEF, 2003–2009). 

26
  
Figure 13: IMD Indices for Bulgaria of Bureaucracy, Ease of Doing Business and Starting a Business are 
somewhat similar in 2009 compared to 2006 

0
2006 2007 2008 2009

B ureauc rac y E as e of doing bus ines s S rarting a bus ines s

Source: World Competitiveness Yearbook (IMD, 2006–2009). 
 
Figure 14: IMD’s Bulgaria Ranking of Bureaucracy is Worse Than Starting a Business and Ease of Doing 
Business 
100

90

80

70

60

50

40

30

20

10

0
2006 2007 2008 2009

B ureauc rac y ‐ rank B ureauc rac y ‐ relarive rank

E as e of doing bus ines s  ‐ rank E as e of doing bus ines s  ‐ relative rank

S rarting a bus ines s  ‐ rank S tarting a bus ines s  ‐ relative rank

Source: World Competitiveness Yearbook (IMD, 2006–2009). 

A valuable indicator of the regulatory burden is the share of time that senior managers
report spending on activities relating to regulations. While in 2002 such activities took up 3
percent of senior manager’s time (for manufacturing firms in Bulgaria), this share reached 5
percent in 2009 (see Figure 15). There is a dynamic of this indicator that can be divided into
27
  
three stages. The first stage, which reflects the condition until 2005, is characterized by a slow
increase in the amount of time spent by senior management, reaching 3.4 percent by the end of
the stage. A drastic worsening of this indicator is shown during the second stage from 2005
until 2007, which is likely to be an increase due to the compliance with EU requirements. For
instance, in 2007 the value of this indicator exceeded 17 percent. The third stage came after
2007, when the time spent by senior management on dealing with regulations fell to 9 percent
in 2008. In 2009, this indicator dropped to 5 percent.
Figure 15: Time Spent by Senior Managers of Manufacturing Firms in Dealing with requirements of 
Government Regulations in Bulgaria dropped substantially in 2009 compared to 2007 

Source:  BEEPS  (2002,  2005,  2008‐2009),  World  Bank  Enterprise  Survey  (2007)  and  ARC  survey  (2009)  for  managers  of 
manufacturing firms in Bulgaria. 
Note: It should be specified that the question was asked differently in 2008 and 2009, compared to previous surveys. In the 
former  case  it  was  asked  what  percentage  of senior  management  time  is  used  over  a  week  on  dealing  with  regulations, 
whereas in the latter case, it was asked what percentage of senior management time is used over 12 months. Please, also 
note  that  in  the  case  of  BEEPS  2008  surveys  the  question  was  asked  to  the  firms  that  have  confirmed  that  they  have 
applied for Government contract in the last fiscal year while in the previous rounds of BEEPS the question was asked to all 
firms participating in the survey. 

The burden of regulation, however, differs across sectors. In the 2009 Administrative and
Regulatory Costs (ARC) Survey in Bulgaria, although the average senior manager of a
manufacturing firm reported spending only about 5 percent of his/her time dealing with
regulation (see Figure 15), managers of new manufacturing firms and IT firms reported
spending longer doing the same thing. In particular, senior management of new manufacturing
firms spent 10 percent of their time and the average manager of an IT firm reported that senior
management spent about 11 percent of their time doing the same.35

An improvement is evident with respect to the indicator showing the average number of
days needed for the issuing of an operating license. While in 2007, 48.3 days were needed
for this, in 2009 only 20.78 days were required. The average value for the region of Europe
and Central Asia in 2009 is 26.19 days, while for all examined countries, it is 28.93 days. With

35
For more details about the burden of regulation, see World Bank (2010a)

28
  
respect to the level of this indicator in 2009, the country stands well in the context of the
Europe and Central Asia region (see Figure 16).
Figure 16: Bulgaria has better standing vis‐à‐vis other countries in Europe and Central Asia Region 
regarding Days to Obtain Operating License in 2009 (in percent) 

70 65,45

60 56,05 57,4

50

36,18 38,15
40 35,59 36,02
33,82
30,83 31,01
30
20,78
20

10

0
8
ry

a
R
8

ia
r ia

k ia
an

d.
8
00

ni
00

FY

00
ga

n
 Fe
st
ga

ve
va

ua
y  2
a, 
e 2

 2
kh

ian
l

Slo

Slo
Hu

h
Bu

us
ni

ke
ain
za

Lit
o

ss
ar
r
Ka

ed

Tu
r

Ru
l
Uk

Be
ac
M

Source: Enterprise Surveys (World Bank). 

3.3 Status and Dynamics of Qualitative Indicators

As mentioned earlier, general limitations in performing the impact assessment render the
task of measuring targets set in the LARACEAA very delicate. This necessitated the use of
combined methods of analysis. In addition to quantitative analysis of data and information
from various national and international sources, a tailored survey was made among
representatives of the stakeholders, including business leaders, key experts and representatives
of public institutions, and four of the most frequently applied regimes were explored in the
form of case studies of three differing in size municipalities. The detailed studies are presented
in Appendix 4 (Survey Questionnaire), Appendix 5 (Survey Results) and Appendix 6 (Analysis
of Regulatory Regimes at the Local Level).

3.3.1 Achievement of the LARACEAA Objectives: Results

from Survey Findings
The main usefulness of the survey conducted for this report consists of determining the
level of achievement of the Act’s objectives. To analyze this issue, objectives are divided
into three groups. The first group contains the objectives that have been achieved. The
condition to fall into this group is that the prevailing replies of respondents shell be “fully
achieved” and “achieved to a high extent.” The second group includes objectives that have
been achieved only partially. In this group, the ratio of respondents who approve, respectively
disapprove, the statement that a particular objective is achieved, is equal. The third group
consists of objectives that have not been achieved. In this group, the replies of the prevailing
part of respondents are either “achieved to a low extent” or “achieved is rather contrary to the
objective.” This distribution of objectives is presented in Table 3.

29
  
Table 3:  Achievement of the LARACEAA Objectives (in percent) 

Achieved is
Achieved Achieved
Fully rather
Objectives to a high to a low
achieved contrary to
extent extent
the objective

Achieved objectives
1. Clear defining of the types of regimes regulating
20 50 30 0
economic activity
2. Protect free economic initiative 0 60 20 20
3. Clearly define the limits of administrative
intervention in economic activity at central and 10 50 20 20
local levels
Objectives partially achieved
1. Facilitate and promote economic activity through
limiting to publicly justified limits the
administrative regulation and administrative 0 50 40 10
control exercised by state authorities and local
governance bodies
2. Restricting the introduction of new regulatory
regimes (licensing and registration) by requiring a
20 30 30 20
reason for the necessity for such a regulation and
advance notification of affected persons
Objectives not achieved
1. Increasing transparency in the introduction of
0 20 50 30
regulatory regimes
2. Reducing sources of corruption by limiting the 10 10 60 20
discretionary power of administration
3. Securing publicity of the work of administrative
bodies in applying normative acts related to 0 20 40 40
administrative regulation and control on economic
activity, as well as the reasons for their changes
4. Restricting and reducing publicly unjustified 0 20 50 30
burdening of economic activity
5. Eliminating normative requirements that may
10 20 35 35
reduce competition
Source: Authors' survey (see Appendix 5 for more details).  

3.3.2 Case Studies of Regulatory Regimes at the Local

Level
Review of four regulatory regimes in three municipalities in Bulgaria was carried out to
provide specific knowledge of the mechanisms of introduction and implementation of
regulatory regimes at the local level. The municipalities of Razgrad, Troyan, and Kyustendil
were the objects of the study. The allocation of reviewed regimes by municipalities is
presented (see Table 4). The permit regime for performance of taxi transportation—common
for all three municipalities—was selected for the analysis. The regime for categorization of
hotels was chosen for the Municipality of Kyustendil, trade certificates regime for the
Municipality of Razgrad, and the regime for construction permits was selected for the
Municipality of Troyan. It should be specified that these cases do not constitute a representative
sample of all 264 municipalities in Bulgaria, but the review adds value to the general
understanding of how regulatory regimes are handled at the local level.

30
  
Table 4:  Allocation of Reviewed Regimes by Municipalities 

Regime for Trade Regime for Regime for

performance of taxi certificates categorization of construction
transportation regime hotels permits

Municipality of
 
Razgrad

Municipality of
 
Kyustendil

Municipality of
 
Troyan
Source: Authors’ analysis. 

Based on the case studies the following can be concluded:36

Compliance with national legislation. The review of the regulations implemented at the
local level indicates that many comply with national legislation and do not constitute
special initiatives of the local authorities;
Additional requirements are enforced. The local authorities, however, enforce additional
requirements that are not directly related to and necessary to facilitate regulated
commercial activity. Most common among these are requirements for timely payment of
taxes. Such requirements should be abolished from the application procedures;
Duplication of documents submitted. Some of the documents required from businesses
are issued by the local authorities themselves. This duplication is time- and resource-
consuming for the business. The implementation of a system for information exchange
between institutions would solve this problem;
Public registers are not used. The municipalities do not make use of public registers as a
means to publish the decisions issued in accordance with the regulatory regimes. This
would be of considerable use for businesses and citizens in exercising control over the
quality of the services provided to them;
Fees are not imposed to raise extra funds. Generally, the analysis demonstrates that
regulatory regimes examined have no fiscal functions; in other words, the local
governments do not impose fees simply to raise funds. The fees cover the expenses relating
to the provision of the service. The term for issuing of administrative decisions in
accordance with regulatory regimes can be evaluated as being acceptable to the businesses;
Unlawful use of registration regimes. The regime for registration of a commercial
establishment in the Razgrad municipality is still used in some other municipalities and
should be abolished because it is unlawful.

3.4 Summary of Quantitative and Qualitative Analyses

The quantitative performance indicators used for measuring LARACEAA’s goal and
objectives are placed in three groups: worst performance, showing some progress, and
most developed. The indicators showing the worst performance by Bulgaria are those
concerning the efficiency of legal framework and transparency of policy making (see Table 5).
These are the indicators that are the bottlenecks of regulation in Bulgaria and require special
attention in the future. A second group of indicators show some progress. These include the
overall burden of regulation, bureaucracy, and ease of doing business, among others. These

36
See Appendix 6 for more information.

31
  
indicators also need special measures for further improvement. The third group consists of
indicators that are the most developed. For instance, these are the share of firms identifying
business licensing and permits as major constraints, product market regulation index, the
number of regimes proposed for abolition or simplification, the average number of days needed
for the issuing of an operating license, etc. These indicators need to be further sustained and
strengthened.
Table 5: Summary Matrix of State and Dynamics of Quantitative Performance Indicators 
Indicators State Dynamics
Outcome Indicators
 Global competitiveness index of WEF  
 Competitiveness index of IMD  
 Doing Business Index  
 Product market regulation index  
 Share of firms identifying business licensing and
 
permits as major constraint
Output Indicators
 Number of regimes, proposed for abolition or
 
simplification
 Number of e-services to be implemented  
 Introduction of one stop shops and centers for e-
 
services at regional and local level
 Establishment of Administrative register  
 Identification of legislation that generate
administrative burden related to information  
provision
 Number of prepared IAs  
Results Indicators
 Overall burden of regulation  
 Efficiency of legal framework X  
 Transparency of policy making X  
 Bureaucracy  
 Ease of doing business  
 Starting a business  
 Time spent by the senior management in dealing
 
with regulations
 Average number of days needed for the issuance
 
of an operating license
Source: Authors’ analysis. 
Notes: 
 ‐ positive dynamics or high level 
 ‐ negative dynamics or low level 
 ‐ neutral dynamics or middle level 
 ‐ not available 
Good level and positive dynamics
Certain progress in level of development and dynamics is shown
X Low level of development, no progress or negative dynamics

Other observations as a result of the qualitative analysis to be emphasized:

Transposition of EU regulations added additional administrative and regulatory
burdens. The country’s accession to the EU and the rapid introduction of regulations,
which stem from the acquis communautaire during the period of analysis and evaluation,
exert an influence over the condition and dynamics of administrative regulation of
business. The regulatory and administrative burden for business has increased as a result of
EU regulations;

32
 
Partial achievement of the LARACEAA’s objectives. The assessment indicates that the
goal of LARACEAA (placing publicly justified limits on administrative regulation and
control of business and raising the national competitiveness) has been only partially
achieved. The Act also has achieved only some of its objectives, among them: (i) “Clear
definition of the types of regimes regulating economic activity,” (ii) "Protect free economic
initiative”, and (iii) “Clearly define the limits of administrative intervention in economic
activity at central and local level”;
A number of important objectives set out in LARACEAA have not yet been achieved.
Objectives of the LARACEAA that have not yet been achieved include: (i) “Increase
transparency in the introduction of regulatory regimes,” (ii) “Reduce sources of corruption
by limiting the discretionary power of administration,” (iii) “Secure publicity of the work
of administrative bodies in applying normative acts related to administrative regulation and
control on economic activity, as well as of the reasons for their change,” (iv) “Restricting
and reducing publicly unjustified burdening of economic activity,” and (v) “Eliminate
normative requirements that may reduce competition”;
Bulgaria’s Better Regulation Policy has not been carried out consistently and
systematically; improvements have been slow. Therefore there are peaks and valleys in
the results of regulatory reform. The level of national competitiveness is still low
compared to other EU members and developed countries. However, the dynamic of most
indicators displays slow tendency toward improvement;
Limited increase of the number of licensing regimes. In the analyzed period licensing
regimes increased from 39 to 42, which resulted from the implementation of five new
regimes and the abolition of two regimes. Seven amendments and supplements were made
to six regimes throughout the period;
Business regulations are not the most important problem facing business. Recent
business surveys found that regulations represent an important—but not the most
important—problem facing business. Besides the volume of introduced legislation, the
major cause of dissatisfaction with the government among the business community is the
organization and quality of services provided by the government and its agencies. Apart
from regulations, the limited access to finance and the prevalence of the informal economy
are the major problems facing business;
Local authorities enforce unnecessary burdens on business and they do not make use
of public registers. The review of regulatory regimes enforced at the local level indicates
that many of them evolve from national legislation and thus do not constitute special
initiatives by local authorities. The local authorities, however, collect available
information and useless requirements that are not directly related to the decision to issuing
a permit. The municipalities also do not make use of public registers, which are required
by the Act, to publish decisions relating to the regulatory regimes. In addition, illegal
implementation of a commercial establishment registration regime within one of the
municipalities under review was evidenced.

33
  

CHAPTER IV 
MAIN PROBLEM, DRIVERS AND EFFECTS OF THE
PROBLEM, AND RECOMMENDED AMENDMENTS TO THE
LARACEAA
LARACEAA has exerted a favorable influence by reducing regulatory
and administrative burdens on business, but the Act needs to be
amended to function better. Despite the progress in reducing
regulatory and administrative burdens, a multitude of obstacles
continue to exist for the Act’s enforcement, thus necessitating its
amendment. Based on the ex-post impact assessment of LARACEAA,
this final chapter identifies the main problem, discusses underlying
drivers and effects of the problem and proposes key recommendations
to amend the Act in three particular areas: instrumental, institutional
and economic.

Major Problem Identified: Broad state intervention in economic activities as manifested

by the presence of a large number of regulatory regimes introduced by special laws that
result in reduced transactional efficiency and competitiveness of the economy.37

4.1 Underlying drivers of the problem (“roots of the tree”)

Limited scope of the Act. The Act stipulates the main principles of regulatory impact by
distinguishing between two types of regulations: (i) licensing and registration regimes and (ii)
separate deals or single actions that refer to individual deals. However, most regulation of
business remains beyond the scope of the Act and is covered by the Administrative Procedures
Code and other special laws.
Limited application of the principle of “silent consent.” Art. 28 of the Act provides that this
principle (which means that a business application is presumed to be approved unless it is
denied within a certain period of time) relates to the issue of permits and certificates for
individual deals or actions, unless otherwise provided by another law. The research indicated
that, in general, special laws avoid the application of the principle of “silent consent.” Only six
laws apply this principle.
Adoption of a new regulatory regime is not preceded by the development of an ex-ante
impact assessment as required by the Act. No ex-ante impact assessment is ever made
during the drafting and submitting of new regulatory regimes. This is required by Art. 3,
paragraphs 4, 5 and 6 of the Act for licensing and registration regimes. The Act also provided
that the impact assessment should be published on the Internet or made public in another
adequate way; this also is not the practice. Most of the 16 amendments to the Act relate to the
introduction of new regulatory regimes, and no evidence has been discovered that this
requirement of the Act has been fulfilled.

37
The problem is defined on the basis of its manifestations identified in the analysis of objective information,
careful study and research of documents, as well as by meetings and discussions with interested parties.
34
  
Inadequate institutional framework. The Act does not have an adequate institutional
framework. This results from three main factors:

 Lack of an effective sanction and control system for enforcing the Act. Although a
sanction and control system has been created to ensure that public officials carry out their
duties as defined in the Act, it is non-functional and not applicable, since the
responsibilities to impose sanctions are assigned to the heads of administrative structures.
As per Art. 30 (1) of the LARACEAA, the mayor or the minister is to impose a fine of
BGN 1,000 (EUR 500) to 5,000 (EUR 2,500) on an official of his/her own administration,
unless another sanction is applied. Hence, there is no external sanction or control
mechanism over civil servants. This makes it likely that delays or mistakes by civil servants
will go unpunished. An additional disincentive for sanctions is that the amount of a
possible fine is very high. Another factor is that businesses are subject to numerous
inspections resulting from multiple types of administrative regulations; this increases the
possibility that one or more officials might violate the terms of the Act.

 Lack of a truly functional united register of administrative regimes. The Act contains
only a list of licensing regimes and the requirement that all administrative bodies that issue
licenses and make registrations shall keep a special register for each procedure. Our
research into 41 existing licensing regimes indicated that in 12 of them either no register is
available, or a register exists but is not publicly accessible as is required by the Act (see
Appendix 7). Attempts so far to build such registers have achieved only partial success. The
first to be created was the Register of Administrative Structures and Administrative Acts at
the Internet address www1.government .bg/ras/regimes/index.html. Though still accessible
on the Internet, this Register has not been updated recently. It lacks a list of introduced
registration regimes, procedures on different regimes are not presented, and the
classification of regimes is not correct (e.g., so-called coordination regimes exist). The
other functioning register, which can be found at www.egov.bg, is better structured and
technically presented. However, the listed regimes are not grouped and classified correctly.
In addition to the regimes determined by the Act, there are also regimes for permission,
notification, certification, etc. Information on the site is not regularly updated. For instance,
it still contains the procedure for issuing licenses to expert evaluators, even though such
licenses have been abolished. Internet links are missing to institutions responsible for
carrying out the procedures. Although the site was designated a single point of contact
under Directive 2006/123/ЕC, it lacks the required functionality to serve the purpose and
availability of English version.

 No official authority "owns" responsibility, under the Act, for its implementation, to
control its performance or to suggest necessary amendments. The lack of such
responsibility can hardly be compensated by the general administration of the CoM, or
another functional or line ministry. Given the findings of this report, the Act has not been
incorporated as an integral part of a general strategy for reduction of administrative burdens
on business and restricting bureaucratic interference. This activity demands constant efforts
on behalf of the state, since bureaucracy shall never voluntary surrender its powers and
prerogatives. The lack of a structure with responsibility for the Act was noticed only in
2009, when an unsuccessful attempt was made to place the Minister of Justice and the
Minister of Finance in that role. Subsequently, this was determined to be a non-realistic
solution, and an amendment for the abolition of this “still-born” text of the Act was
introduced.

35
  

4.2 Effects of the problem

High costs to businesses related to applying for and obtaining licenses, registrations,
permits, and certificates. These costs have both a financial measure and a measure for the loss
of valuable time. In financial terms, most important are the losses resulting from the fees for
permits. Sometimes these fees are in no way related to the real costs of services delivered to
business and are used rather as a tool for redistribution of income in favor of the bureaucratic
machine.38 In this way, services are double-financed: first, tax-payers pay and the budget
distributes resources for administrative services to business and, second, the same service is
financed again in the form of additional material incentives to officials in administration.
Procedures for issuing registrations, permits and certificates are not transparent.
Applying companies do not receive adequate information on the course and progress of the
procedure. Use of flow charts to analyze procedures is not utilized in government agencies.
Even a simple analysis of any procedure can determine how slow and intertwined
documentation is among different units; how many unnecessary units process the files, and how
valuable resources are wasted in unnecessary operations. The optimization and rationality
approach is applied neither in the creation nor in the application of procedures. Applications are
not always dealt with in the order received; for example, a company that has filed its permit
application later might obtain a decision before a company that had filed an application earlier.
This has potential serious ramifications as follows:
 Creating possibilities for corruption. The lack of transparency always creates
possibilities for corruption, since the mechanism of external control is absent, as is self-
control of administration activity.
 Enabling a strong bureaucracy to make unreasonable demands. Even though a
bureaucracy could obtain information about the legal status of a company from its own
public registers, it might require the company to produce such documentation on its own,
thus resulting in unnecessary expense and duplication. In another example, the
bureaucracy would not allow an applicant simply to declare the lack of a previous criminal
conviction. Instead, a certificate is required by a court of this fact, thus requiring at least
two visits to the court, payment of a significant fee, together with the monopoly
commission of the service bank to transfer the amount of the fee to the court’s account.
The high share of informal economy is the result of heavy burdens imposed by
administrative regulation and administrative control. This implies losses in public welfare
and demands greater public resources for control and sanctions on companies in the shadow
economy. The large shadow economy has a bad influence on the business environment and
business ethics because it places legitimate firms in disadvantageous competitive position.
The unlawful introduction of regulatory regimes by local authorities also stifles
entrepreneurship.
The worsened business climate is reflected in lower investment activity and reduced
competitiveness of the economy.

38
For example, the fee for registration of a pharmacy was BGN 5.000 since 2000. This led to lack of pharmacies
in the village areas. After the amendment of the Law on Medicinal Products for Human Use from December 2009
this fee was reduced to BGN 1.000 but only for towns and villages with less than 10.000 inhabitants, although the
administration of the regime is one and the same in different settlements.
36
  
The following figure visually depicts the main problem, drivers of the problem and effects of
the relationships.
Figure 17: Problem Tree 

Source: Authors’ graph. 

4.3 Key Recommendations for Amendments to the

LARACEAA
To address the inherent weaknesses of LARACEAA and the need to realize larger
benefits from it, three sets of amendments to the law are recommended. These
amendments would: (i) improve its administrative provisions (instrumental amendments); (ii)
strengthen its institutional support (institutional amendments); and (iii) introduce new rules for
calculation of administrative fees (economic amendments). Detailed recommendations are
provided below:

Instrumental amendments
 Introduction of new key principles (e.g., avoidance of duplication of submission of
identical documents to both central and local authorities) of administrative servicing in the
Act relevant to all relationships between businesses and the administration;
 Application of the principle of “silent consent” in the area of registration regimes;

37
  

 Broad implementation of declarations of compliance by applicants, along with suitable

mechanisms for verifying those declarations, instead of requiring official documents
issued by a Court or other administrative bodies;
 Establishment of a minimum time period during which an applicant for a license or permit
can correct mistakes on the application;
 Improved oversight and control of the sanctioning mechanism within the administration
and reduction of the burden on controlled entities;
 Introduction of instruments enabling an analysis of whether proposed regulatory regimes
comply with the three groups of criteria under the LARACEAA (national and personal
security, human and property rights, and environment).

Institutional amendments
 Establishment of a unit within the administration of the Council of Ministers that would
oversee implementation of the Act and impose sanctions when public administration
officials violate it;
 Establishment of a uniform Administrative Register of regulatory regimes to provide easily
accessible information and advice on all procedures and required documents.

Economic amendments
 Introduction of additional principles for setting charges for administrative services;
 Regulation of the amount of the charges on the basis of adopted rules;
 Introduction of the principle "one procedure – one charge." Surcharges should be
prohibited when additional actions are required for an applicant to correct mistakes or as an
incentive for administrative officials to perform their jobs.

These recommendations and proposed amendments may help the Bulgarian authorities use the
LARACEAA to further advance regulatory reform. But they should proceed in parallel with
other actions under Bulgaria’s Program on Better Regulation and related initiatives. An
improved Act can become a powerful means of reform only if it is part of those broader efforts
and has political support at the highest levels.

38
  

REFERENCES
Bulgarian Industrial Association (2007). Existing Regimes on the business activities. BIA report: Sofia.
Djankov, Simeon, Caralee McLiesh, and Rita Ramalhoр (2006). Regulation and Growth. World Bank:
Washington DC, accessible at: SSRN: ssrn.com/abstract=893321.
European Commission (2009). Impact Assessment Guidelines. SEC (2009) 92.
European Commission (2007). Spillovers and complementarities in the context of the Lisbon Growth
and Jobs Strategy including economic effects of the Community Lisbon Program. Commission Staff
Working Document.
IMD, World Competitiveness Yearbook, 2006-2009.
Jacobs & Associates and Institute of Market Economics (2009a). Development of Capabilities for
Conducting Impact Assessment of Regulations and Policies. Document prepared for the Better
Regulation Unit at the Council of Ministers Administration, financed by the European Social Fund.
Accessible at www.strategy.bg.
Jacobs & Associates and Institute of Market Economics (2009b). For Better Public Management:
Institutionalization of the Process of Impact Assessment of the State Administration. Document prepared
for the Better Regulation Unit at the Council of Ministers Administration, financed by the European
Social Fund. Accessible at www.strategy.bg.
NRR (2009). Regulation Indicator 2008. Better Regulation for Business in Sweden: an evaluation of
government initiatives, June 2009
www.nnr.se/assets/files/publikationer/NNR_Regulation_Indicator_2008.pdf.
NRR (2008). The Total Cost of Regulations to Businesses in Sweden.The Total Cost of Regulations to
Businesses in Sweden, January 2007
www.nnr.se/assets/files/publikationer/nnr_thetotalcostofregulations.pdf.
SIGMA (2001). Improvement of the Political Instruments Through Impact Assessment. SIGMA Paper
No.31. OECD: Paris.
Schatz, M., M. Schiebold, S. Kiefer, H. Riede (2009). Handbook for Measuring Regulatory Costs.
KPMG, 2009. www.bertelsmann-stiftung.de/cps/rde/xbcr/
SID-33E14E80-2D201348/bst_engl/xcms_bst_dms_29039_29040_2.pdf
Wolfl, Anita, I. Wanner, T. Kozluk, and Giuseppe Nicoletti (2009). Ten Years Of Product Market
Reform In OECD Countries - Insights From A Revised PMR Indicator. Economics Department
Working Papers No.695, OECD, 2009.
World Bank (2010a). Bulgaria: Administrative and Regulatory Barriers to Business. Report No. 55727-
BG. Washington DC: World Bank.
World Bank (2010b). Policy Note on Private Sector Development, in World Bank, Mapping Bulgaria’s
Future: Inclusive Growth and Productive Jobs. Washington: DC.
World Bank (2009). Bulgaria: Reforming the Regime of State Fees. Report No.55729-BG. Washington
DC: World Bank.
World Bank (2008). Bulgaria: Investment Climate Assessment.World Bank: Washington DC.
World Bank (2007). Product Market Regulation in Bulgaria: A Comparison with OECD Countries,
Policy Research WP 4393.
World Bank, Doing Business 2004-2010. World Bank: Washington DC.
World Bank and EBRD, BEEPS, 2002, 2005, 2008-2009.
World Bank Enterprise Survey, 2007. World Bank: Washington DC.
World Economic Forum, Global Competitiveness Report, 2004-2009.

39
  

Laws, Ordinances and other Documents reviewed:

Commercial Register Act, SG. No34/ on April 25, 2006, amended, SG, No44/on 12.06.2009.
Council of Ministers (2010). Convergence Program 2009-2012. Document of the Government
of Bulgaria.
(2009a). Governmental Program for European Development of Bulgaria 2009-2013.
Document of the Government of Bulgaria.
(2009b). Setting and Measuring the Administrative Burden, Stemming for the Information
Obligation of the Business and Recommendations for their Limitation. Report of Consortium
“Project: Administrative Burden on the Business” for the Ministry of Economy and Energy.
(2006). Decision 482, 2006.
(2002a). Decision 866, December 28, 2002.
(2002b). Motives to the Draft LARACEA Law, No. 202-01-85/09.12.2002.
Decision of the CoM on May 8, 2009. Ministry of State Administration and Administrative
Reform Report on the State of the Administration in 2008.
Decision of CoM No. 705, August 31, 2009.Electronic Governance Act (2007). Promulgated
SG 46/June 12, 2007.
Independent Evaluators Act (2008). Promulgated SG 98/ November 14, 2008.
Limiting Administrative Regulation and Administrative Control on Economic Activity Act. SG
(55), June 17, 2003 and Guidelines for Application of the Limiting Administrative Regulation
and Administrative Control on Economic Activity Act. Document of the Council of Economic
Policy at the Council of Ministers of Bulgaria.
Ordinance No.192 of the CoM for the establishment of the Council on Administrative Reform.
SG (64), 2009.
Rules and Procedures of CoM and its Administration, SG, No. 10/2009 from 6.02.2009.
Structural Statute-book of the CoM and its Administration, SG (10), February 6, 2009.

Internet sources:
www.worldbank.bg.
www.egov.bg
www1.government.bg/ras/regimes/index.html.
www.esc.bg/viewpoints.php?lang=0
Statement on Opportunities for Decreasing the Administrative Restraints and Improving the
Business Environment in Bulgaria. Document of the Economic and Social Council of the
Republic of Bulgaria (as of March 2009)
www.strategy.bg
Government strategic and specific documents to be found, including seven ex-post impact
assessments of the following acts: Investments Promotion Act, the Waste Management Act, the
Child Protection Act, the Law on Drugs in Human Medicine, the State Fees Act, the Local
Taxes and Fees Act, and the Social Assistance Act. Another seven ex-ante impact assessments
have been conducted through consultancy work on the draft Act on Amendment and
Supplement (AAS) of the Law on Measurements, the draft AAS of Investments Promotion Act,
the draft AAS of the Waste Management Act, the draft AAS of the Law on Foods, the draft Act
on Hydro-meliorations and Irrigation Agriculture; the draft of AAS of the Law on Health
Institutions, and the draft Law on Public Libraries.

40
  

APPENDICES
Appendix 1: Licensing Regimes’ Compliance with the Requirements of the
LARACEAA

National
Personal and
security,
property rights Environ
Licensing regime / criteria public order
of citizens and -ment
and
LP
sovereignty
Banking activity, electronic money activities, payment
1. institution activities, as well as system operator of  
payment systems activities.
2. Insurance activity and insurance broker activities. 
Regulated securities market activity, investment
mediator, investment or management company as well
3.  
as a joint-stock company with a specialized investment
goal.
Additional voluntary and mandatory pension security
4. activities and actuarial activity for servicing of pension 
security companies.
Voluntary social security activities for the unemployed
5. 
and/or professional qualification.
6. Health security activities. 
7. Stock market activities.
8. Customs agent activities.
9. Duty-free trade.  
10. Gambling activities. 
Production, transportation, trade and foreign trade
activities relating to weaponry, explosive and military
11.   
supplies as well as certain supplies and technologies
with dual-use.
12. Private security activities.  
Activities relating to drafting, manufacturing, import,
trade, repair, installation and maintenance of fire
13.   
precaution equipment, activities relating to emergency
and fire safety, ignitable and explosive activities.
Manufacturing of compact disks (optical disks)
14.
and/or matrixes for them.
Medical institution activities relating to hospital care,
15.   
clinics and homes for medical-social care.
Clinical studies, manufacturing, trade or import of
16.   
medical and curative products.
Production, processing, transportation, trade, import,
17. export, transit and storage of narcotic substances for   
medical and veterinary purposes and precursors.
Industrial processing of tobacco and production of
18.
tobacco products.
Technical surveillance of hazardous installations,
19.   
examination of measurement equipment.
Production of alcohol, distillates and alcoholic
20.
beverages.
Production and preparation of sowing and planting
material for agricultural plants, variety of examination
activities for agricultural plants, used for sowing and
21.   
planting material, distribution and trade with seeds and
planting material that deviates from the minimal quality
requirements.
Public warehouses for grain and grain depository
22. activities. 

41
 APPENDICES 
National
Personal and
security,
property rights Environ
Licensing regime / criteria public order
of citizens and -ment
and
LP
sovereignty
Obtaining, processing and storage of sperm and ova,
transplantation of embryos in artificial insemination
23. centers and centers for embrio transfers as well as 
breeding association activities relating to selection and
production within the veterinary medicine system.
Manufacturing and usage of veterinary medical
24. products, retail and wholesale trade of veterinary  
medicinal products and transportation of animals.
25. Commercial Fishery
Commercial activities with wastes from ferrous and
26.
non-ferrous metals
27. Activities in the energy sphere   
Activities, related to utilization of nuclear installations,
28.   
nuclear material and other sources of ionizing radiance
29. Construction supervision on construction sites   
Railway transportation of passengers and/or freight and
30. inspection of the technical condition of the carriages and   
the legal capacity and qualification of the personnel
Public transportation of passengers and freight via
31. automobile transportation, including international 
transportation
Inspection of the technical condition of the means of
32. road transportation; repair and technical servicing of  
those means
A universal postal service or services which fall
33.
within the scope of the universal postal service
34. Postal money transfers 
Airport operator activities; ground services operator or
35.   
airline carrier
36. Technical servicing and repair of aviation technology 
Production, import and/or distribution of radio
37.
transmission devices for civil purposes
38. Radio and television activities  
39. Freight transportation along internal water-ways 
40. Provision of social services to children 
41. Conducting and certifying of vocational training 
42. Informing and conducting of vocational orientation 

Legend Key:
 - very high compliance level
 - high compliance level
 - presence of compliance

42 
  

Appendix 2: Information on the Status of Regimes under the Better

Regulation Program (2008-10)

Res-
Regimes under pon-
Simplification Procedure Law Status
Facilitation sibility
of
1. The replacement of the license regime for carrying Law on MEET No changes.
Licensing of out commodity exchange and clearing house commodi Draft amendment law of the
commodity exchange activities with a registration regime is envisaged. ty Law on commodity
activities exchange exchanges and market-places
s and – postponed by Protocol
market- №28 of 17.07.2008.
places Published on the Public
consultations website:
www.strategy.bg

2. Replacement of license with registration regime. Law on MAF Simplified.

Licensing of carriers Amendments to Art. 165 of the Law on the veterinar Draft amendment law on the
for transportation of veterinary activity are envisaged. Para. 1, b. 2 and y activity Law on the veterinary
animals 4, requiring provision of documents that the activity approved by CoM
administrative authority is also obliged to dispose with Decision №699 from
with, have been abolished. By shifting towards 06.11.2008. The regime has
registration regime, the administrative authority been simplified as described
has no option to refuse the activity execution on in column 2.
expedience any more, and, according to Art. 14, The draft amendment law
para.1 of the Limiting Administrative Regulation was submitted to the
and Administrative Control on Economic Activity National Assembly on
Act, it will be obliged to give permission for this 07.11.2008
activity provided that the normative requirements I reading on 12.03.2009
have been fulfilled. Stage - discussion
Published on the Public
consultations website:
www.strategy.bg

3. Replacement of license with registration regime. Law on MAF Simplified.

Licensing of It is envisaged to make an amendment in Art. 364 veterinar Draft amendment law on the
wholesale trade with of the Law on veterinary activity. By shifting y activity Law on the veterinary
veterinary medical towards a registration regime, the administrative activity approved by CoM
products authority has no option to refuse the activity with Decision №699 from
execution on expedience any more, and, according 06.11.2008. The regime has
to Art. 14, para.1 of the Limiting Administrative been simplified as described
Regulation and Administrative Control on in column 2.
Economic Activity Act, it will be obliged to give The draft amendment law
permission for this activity provided that the was submitted to the
normative requirements have been fulfilled. National Assembly on
07.11.2008
I reading on 12.03.2009
Stage - discussion
Published on the Public
consultations website:
www.strategy.bg

4. Replacement of the licence with registration Law on MAF Simplified.

Licensing of regime.It is envisaged to make an amendment in veterinar Draft amendment law on the
wholesale trade with Art. 375 of the Law on veterinary activity. By y activity Law on the veterinary
veterinary medical introducing registration regime, the administrative activity approved by CoM
products authority has no option to refuse the activity with Decision №699 from
execution on expedience any more, and, according 06.11.2008. The regime has
to Art. 14, para.1 of the Limiting Administrative been simplified as described
Regulation and Administrative Control on in column 2.
Economic Activity Act, it will be obliged to give The draft amendment law
permission for this activity provided that the was submitted to the
normative requirements have been fulfilled. National Assembly on
07.11.2008
I reading on 12.03.2009
Stage - discussion

43
 APPENDICES 
Res-
Regimes under pon-
Simplification Procedure Law Status
Facilitation sibility
of
Published on the Public
consultations website:
www.strategy.bg

5. It is envisaged to prepare a draft amendment law of Law on MEYS/ Simplified.

License for the Law on vocational education and training that vocationa MLSP With Decision №116 from
vocational education will provide for revision and facilitation of the l 26.02.2009. на The CoM has
and vocational procedures for licensing of vocational education education approved a draft amendment
orientation centers and information and professional and Law on vocational education
orientation centers, as well as for revision and training and training. The changes
facilitation of the application forms for both envisage a simplification of
procedures. the license issuing procedure.
It is also envisaged to amend the license of The requirement for the
vocational education centers and information and managing committee of
professional orientation centers fee tariff, collected NAVET to pass judgment on
by the National agency for professional education the issuing of the license is
and training. The administrative regime will be abolished, since the director
facilitated by introduction of two new steps in the of NAVET passes judgment
tariff at the stage of candidate’s proposal on that. The deadline for
evaluation (at the start of the procedure) – fees for passing judgment is
candidates with one profession and for candidates decreased from 4 to 3
with 2 to 6 professions. months. A regulated deadline
for dealing with
incompleteness of the
documents is envisaged. The
procedure for issuing of
licenses or license refusal
will be amended. It is
envisaged to establish a
register of licenses issued.
The draft amendment law
was submitted to the
National Assembly on
27.03.2009
I reading on 27.03.2009
Stage - discussion
Published on the Public
consultations website:
www.strategy.bg
6. The amendments in the Law on waste management Law on MOEW Envisaged for
Permit of envisage: waste consideration.
performance of 1. Excluding from the permission regime the most managem 1.Draft amendment law
activities including often demanded permissions for performing ent prepared.
collection, activities with dangerous waste, namely their 2. The change in the
transportation, temporary storage on the place of origin. administrative regime –
temporary storage, 2. Shortening by ½ the deadlines* for concerting approval of the programs for
preliminary the Programs for waste management activities – waste management is
treatment, utilization new paragraphs 7, 8 and 9 have been created in included in the draft
and/or rendering Art.30 that set up those shorter deadlines. amendment Law on Waste
harmless of waste * At present the deadline is 30 days. Management
3. Reduction by 30 days of the overall duration of The draft amendment law
attaining approval for the Company waste activity on the Law on waste
programs, and in case of a single return for missing management is included in
details completion – to maximum 75 days: the Legislative Program of
A removal of a stipulation currently in force has the CoM for consideration
been proposed (Art.30, para. 4 - „The director of on 25.06.2009
the regional inspectorate for environment and
waters, on which territory is the seat of the persons
as per the commercial register, shall approve the
draft program after receiving statements about their
co-ordination by the regional inspectorates for
environment and waters, on which territory the
activities are implemented.”)

44
 Ex‐Post Impact Assessment of the LARACEAA                                                                                     APENDIX 2 
Res-
Regimes under pon-
Simplification Procedure Law Status
Facilitation sibility
of
7. MOEW Position: "The waste management Law on MOEW No changes.
Permit of organisations are specific legal entities that have waste MOEW does not envisage
organization on some modalities with regard to other commercial managem abolition of the permission
utilization entities. First, they accumulate public funds ceded ent regime
by the government. Second, they are non-profit.
Third, they are allowed to spend the accumulated
funds only on specific purpose and are subject to
annual auditing for this. Hence they have to remain
on permission regime."
8. The amendments on the Law on plants protection Law on MAF No changes.
Licensing of persons as of 28.03.2006 with regard to the permission plants
who import, sell, regime are in contradiction with the LARACEAA protectio MAF does not envisage
pack and wrap since the permission is issued for each separate n abolition of the permission
products for plant deal or activity, while substantially this is a regime for persons who
protection with registration regime. import, sell, park and wrap
commercial purpose In the period 2008-2010, no facilitation of the products for plant protection
or perform plant permission regime for trade and re-packaging of or perform plant protection
protection services plant protection products is envisaged. The regime services.
for performing plant protection services has The regime for providing
already been abolished. plant protection services has
been abolished.
Promulgated. SG, issue
26/2006

9. Shift towards approval of objects in line with the Law on MAF/ Simplified.
Registration of sites stipulations under Regulation 1774/2002/ЕО. The veterinar MOEW Draft amendment law on the
for rendering approval procedure is described in Art. A29, para. y activity Law on the veterinary
harmless of animal 2, which refers to the approval procedure under activity approved by CoM
side products and Art. 228, para. 2-7. The regime is facilitated by with Decision №699 from
sub-products introducing a significant reduction of the approval 06.11.2008. The regime has
deadlines. been simplified as described
in column 2.
The draft amendment law
was submitted to the
National Assembly on
07.11.2008
I reading on 12.03.2009
Stage - discussion
Published on the Public
consultations website:
www.strategy.bg

10. A draft Ordinance on amendment of the Order on Law on MRDPW Simplified.

Permits of persons essential requirements for buildings under products CoM Ordinance № 225
for conformity construction and for assessment of building technical from 10.09.2008
assessment of materials’ compliance is prepared. requirem Simplification and
construction products The amendments are related to the reduction of the ents amendment to the Order on
number of documents required as well as of the essential requirements for
deadline for issuing permission based on buildings under construction
compliance assessment, in case the candidate and for assessment of
provides copies of validated certificates for building materials’
accreditation for the same scope of products, compliance.
standards, and competencies as the ones it applies
for.

11. An amendment in the Law on road transport is Law on MTITC Envisaged for
Permit of occasional envisaged aimed at making more precise the texts road Consideration
transportation requiring administration approval for casual bus transport Draft amendment law is
transport. Yet, the measure will be preserved on its prepared. Meeting of MTITC
whole. with stakeholders is
conducted, agreement has not
been reached.
Forthcoming inclusion into
the Legislative Program of
the CoM.

45
 APPENDICES 
Res-
Regimes under pon-
Simplification Procedure Law Status
Facilitation sibility
of
12. According to a draft Law on amendment of the Law on MTITC Envisaged for
Permit of taxi Law on road transport, the registration will no road Consideration
transportation longer be under responsibility of the Ministry of transport Draft amendment law
Transport, respectively the “Road Administration” prepared. Meeting of MTITC
Executive Agency; it will be carried out by the with stakeholders conducted,
correspondent municipalities (upon issuance of agreement has not been
permission). Thus, the Municipality Council will reached.
locally define the number of taxi vehicles as well Forthcoming inclusion into
as the terms and conditions for their operation. the Legislative Program of
the CoM.

13. The draft Law on amendment of the Law on Law on State Abolished.
Categorization of tourism introduces amendments in Art. 50, para.2 tourism Agency With Decision №47 from
tourist sites that aim to abolish the categorisation of the of 29.01. 2009
establishments for catering and entertainment. Tourism of CoM the regime for
categorization of
establishments for catering
apart from shelter spots has
been abolished
The draft amendment law
was submitted to the
National Assembly on
30.01.2009
I reading on 12.03.2009
Stage - discussion
14. The draft Law on independent evaluators envisages Law on MEET Simplified.
Licensing of expert replacement of the existing license regime with a independ Decision №462 from
evaluators of registration one, and the regulation of the ent 15.07.2008 of CoM.
different types of independent evaluators to be carried out by a evaluator This regime is transferred for
assets professional association – the Chamber of s self-regulation by a branch
independent evaluators. association.
The draft amendment law
was submitted to the
National Assembly on
16.07.2008
Approved on 30.10.2008
Promulgated in SG issue
98/2008
15. Position of МТ: After consultations with the EC on Law on MTITC No changes.
Licensing of issues regarding the access to ground services civil МТ does not envisage
operators of airport market it has been clarified that at present it is not aviation consideration of this regime
ground operations possible to remove the license of ground service
operators. Hence it is necessary to consider the
possibility provided by Directive 96/67, according
to which the General Directorate „Civil Aviation
Administration” gives approval before the ground
service supplier starts operating on a certain airport
market. Such an approval will be issued under
clear criteria as stipulated by Directive 96/67, and
will be related to its principles according to Art.14,
para. 1 of the Directive.
16. Unlawful regime contradicting Art. 14, para. 1 of Municipa MSAAR The regime has been
Registration of a the Limiting Administrative Regulation and l administrated by 140
commercial Administrative Control on Economic Activity Act. ordinance municipalities by April 2008.
establishment s By March 2009 the regime is
abolished in 110
municipalities in Bulgaria.
Source: Authors’ research, as of January 2010. 

46
  

Appendix 3: Implementation of the Measures Under the Better Regulation

Program (2008-10), as of April 2009

Operative Goals and Measures Term Responsibility of

GOAL 1. ABOLITION AND SIMPLIFICATION OF THE ADMINISTRATIVE REGIMES

Measure 1.1. Abolishing and simplifying the administrative regimes recommended

by business in compliance with the Appendix:
- decision of the Council of Ministers for the abolition or simplification of regimes 04.2008 CoM

- preparation of the necessary amendments to the statutory instruments 05.2008 MEET, branch ministries
X

Measure 1.2. Conducting systemic evaluations of the administrative regimes and of As of 04.2008 CoM, branch ministries
the administrative boundaries before the realization of commercial activities in
cooperation with the stakeholders (employee organizations, branch associations and X
other).

Measure 1.3. Examination, preparation and implementation of alternative forms of permanent CoM, branch ministries,
regulating economic and social
partners, NAMRB

Measure 1.4. Legislative order and transfer of part of the functions relating to the 2008-2010 CoM, MEET,
regulation of commercial activities to the unions on the basis of tender procedures branch ministries

Measure 1.5. Submitting a recommendation to the Council of Ministers for 09.2008 MEET, CoM
decreasing the unnecessary administrative burden on business, stemming from the
information provision requirement under the existing national legislation, which is
not engaged in the implementation of the European legislation
Measure 1.6. Integrating services in accordance with the “life episodes” and
“business еvents” principles with the aim of simplifying the access and provision of
complex services.

- determining a portfolio of electronic services with high public value end of 2008 MSAAR

- defining the areas of integration of electronic services and setting criteria for their end of 2008 MSAAR
integration

- improving the functionality of the e-government portal end of 2008 MSAAR

- drafting, preparing and implementing of integrated services end of 2008 Branch ministies, MSAAR

- single provision of information to the administration by citizens and business end of 2008 All administrative
structures

Measure 1.7. Improving the quality of administrative services

- control and administrative responsibility in cases of non-adherence to permanent Directors of administrative
administrative servicing deadlines; structures; administrative
courts
- broadening the scope of action of the “silent consent” principle; 2008-2010 Directors of administrative
structures

- strengthening the control by the regional director over the law-abidance of the 06.2008 CoM, MSAAR
municipal council acts relating to the implementation of the administrative regimes;

47
APPENDICES 

Operative Goals and Measures Term Responsibility of

- introducing an evaluation of the work of employees responsible for applying the 12.2008 MSAAR, CoM
regulatory policy.

Measure 1.8. Ensuring the transfer of databases and installation of integrated 2008-2010 MSAAR
information systems

GOAL 2. ESTABLISHMENT AND CONSOLIDATION OF THE INSTITUTIONAL STRUCTURE FOR THE

APPLICATION AND CONTROL OF BETTER REGULATION POLICY

Measure 2.1. Establishing and consolidating the capacity of a Better Regulation

Unit within the administration of the Council of Ministers

- structuring the unit and determining its functions 06.2008 CoM

- training experts from the Unit in the implementation of methodological 06-11.2008 CoM, MSAAR
management of the ministries during impact assessment
X

- improving the coordination of the Better Regulation Unit with the civil society 06.2008 CoM
structures, forming sectoral working groups, which include representatives of
business organizations; X

Measure 2.2. Determining the functions of the central administrations of executive 06.2008 CoM, branch ministries,
authorities in relation to the implementation of the better regulation policy and state agencies, executive
impact assessment X agencies

Measure 2.3. Implementing impact assessment of statutory instruments.

- working out a methodology for conducting a preliminary (ex-ante) incomplete Until 12.2008 CoM, MEET, MSAAR,
impact assessment X MF, MLSP, MOEW, МJ

- working out a methodology for conducting a complete preliminary (ex-ante) Until 12.2008 CoM, MEET, MSAAR
impact assessment of drafts of statutory instruments X MF, MLSP, MOEW, МJ

- setting criteria for selection of drafts of statutory instruments, for which complete 12.2008 CoM, MEET, MSAAR
preliminary impact assessments are conducted as well as of an order and conditions X MF, MLSP, MOEW, МJ
for planning such assessments in the course of developing the legislative program
of the CoM.
- amendments to the Limiting Administrative Regulation and Administrative 12.2008 CoM, MJ
Control on Economic Activity Act (toward improving the control mechanism and
others), the Law on Statutory Instruments (toward implementing a mandatory
preliminary impact assessment), the Structural statute-book of the Council of X
Ministers and its administration (aimed to determine the functions of the Better
Regulation Unit in relation to the application of the better regulation policy), the
Law on Administration, etc.
- initiating the implementation of the preliminary (ex-ante) impact assessments As of 04.2008 CoM, branch ministries

- initiating the implementation of mandatory impact assessments in accordance As of 01. 2009 CoM, branch ministries
with the developed criteria and methodology

- conducting follow-up (ex-post) impact assessment As of 09.2009 CoM, branch ministries

Measure 2.4. Building knowledge and skills in the administration regarding the
facilitation of impact assessment of drafts of normative acts
- developing a training program in accordance with the methodology for conducting Until 12.2008 CoM, MEET, MSAAR
impact assessment and IPAEI

48
Ex‐Post Impact Assessment of the ALARACEAA                                                                APENDIX 3 

Operative Goals and Measures Term Responsibility of

- conducting training of trainers As of 12.200 CoM, MEET, MSAAR
X and IPAEI

- conducting training of officials from the administration As of 01.2009 CoM, MEET, MSAAR
X and IPAEI

Measure 2.5. Intensifying control and accountability

- introducing the requirement for statutory instrument drafts which introduce As of 01.2009 CoM
administrative regimes and regulate their facilitation shall be submitted to the
Council of Ministers after preliminary consulting with stakeholders and the Better
Regulation Unit and shall be accompanied by a mandatory ex-ante impact
assessment.
- creating an Administrative register – provision of actual and accurate information 09.2008 MSAAR
regarding the existing regulatory regimes and administrative services;
X

- effective utilization of the Administrative register for control by business over the 12.2008 MSAAR
administration of the regimes

- preparing an annual public report on the facilitation of the better regulation policy Annually, in the CoM
month of March

Measure 2.6. Broadening the scope of data and improving the access to information end of 2008 PPA, CoM, MSAAR
in the Public Procurement Register
Measure 2.7. Developing indicators for evaluating the activity of the control 03.2009 Regulatory organs, CoM
organs.

Measure 2.8. Evaluating the activities of the control organs. 03.2010 Regulatory organs, CoM

GOAL 3. INTENSIFYING THE DIALOGUE WITH STAKEHOLDERS

Measure 3.1. Mandatory, timely and effective consulting with stakeholders. Permanent All institutions
Measure 3.2. Developing and integrating a policy of mandatory and timely
consulting on the basis of the minimal consultative standards and practices of the
European Union
- working out consultation procedures 09.2008 CoM, MEET, MSAAR
X

- training the administration in conducting consultations as a part of the impact As of 09.2008 CoM, MSAAR and IPAEI
assessment process X

- developing a new module and functionality of the Portal for public consultations 03.2009 CoM
for recommendations from the business, the non-governmental sector and the
citizens regarding regulation improvement X

Measure 3.3. Consultations with business stakeholder groups regarding their role in Permanent MEET, CoM, branch
the system of impact assessment. ministries
Measure 3.4. Prolonging the term for consultations with stakeholders via an 10.2008 CoM
amendment to the Law on Statutory Instruments

Measure 3.5. Mandatory publishing of normative acts relating to administrative Permanent Branch ministries
regulation on the Public Consultations portal at least 30 days prior to their
submission to a session of the Council of Ministers

GOAL 4. OPTIMIZING THE REGULATION AT MUNICIPAL LEVEL AND CONSOLIDATING THE CAPACITY AT
MUNICIPAL LEVEL FOR IMPLEMENTING GOOD REGULATORY POLICIES

Measure 4.1. Overview of administrative regulation and administrative control over

commercial activities at municipal level

49
APPENDICES 

Operative Goals and Measures Term Responsibility of

- analysis of the regimes implemented at municipal level From 06.2008 to CoM, MSAAR, NAMRB
X 02.2009

- abolition of unlawfully implemented regimes 02.2009 Municipal councils,

X regional directors

- recommendations for legislative changes aiming to optimize the control over 05.2009 CoM, mayors, municipal
regulation at local level councils, regional
directors, NAMRB

Measure 4.2. Comparative analysis of regulation practices at municipal level From 09.2008 to CoM, MSAAR, NAMRB
09.2009

Measure 4.3. Optimizing the activity of local self-government bodies

- formulating directions for better regulation at municipal level 02.2009 CoM, MSAAR, IPAEI,
NAMRB, mayors,
X municipal councils,
regional directors
- spreading of good practices 02-07.2009 CoM, MSAAR, IPAEI,
NAMRB, mayors,
municipal councils,
regional directors
- developing a platform for exchange of knowledge and ideas for better regulation 02.2009 CoM, MPAAR, IPAEI,
NAMRB, mayors,
municipal councils,
regional directors
Source: Report on the Implementation of the Better Regulation Program 2008‐2010. 

Completed (for permanent activities - in progress)

X Partially completed
Uncompleted

50
  

Appendix 4: Survey Questionnaire to Stakeholders

1. Name of respondent
……..……………………………………………….…………………

2. Profession and current position of the respondent

……………………….………………...

3. How do you estimate your level of knowledge of the Limiting Administrative Regulation
and Administrative Control on Economic Activity Act (LARACEAA) since the debates before
its adoption to date?

(Please tick the correct answer on each line)

Chronology Excellent Good Satisfactory Not
acquainted
3.1. Before the adoption of
the Act in 2003 – the
debates on it
3.2. Final version of the
Act adopted by the
National Assembly
3.3. Amendments in the
period 2003-2008
3.4. Amendments in 2009

4. Do you keep track of public discussions and publications on LARACEAA?

(one answer)
4.1. Yes, very actively, and I take part in them ………….…………..
4.2. Yes, with interest ........................................................................
4.3. Yes, when I find such material ………........................................
4.4. No ................................................................................................

5. How often do you deal with issues regulated by LARACEAA?

(one answer)
5.1. At least once a week …………...........................................
5.2. At least once a month….……….........................................
5.3. Several times during the year. ............…..…..….….…..…
5.4. Very occasionally ..........................………………….…..

6. What are the major occasions to deal with issues regulated by LARACEAA?
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................

51
APPENDICES 
7. How do you assess the level of achievement of the LARACEAA objectives by the
beginning of 2010?
(Please tick the correct answer on each line)
Achieved
Do
Achieved is rather
Fully Achieved to not
Objectives to a high contrary
achieved a low extent kno
extent to the
w
objective
7.1. Goal of the Act
Facilitate and promote economic activity through
limiting to publicly justified limits the administrative
1
regulation and administrative control exercised by state
authorities and local governance bodies
7.2. Specific objectives
2 Protect free economic initiative

Clearly define the limits of administrative intervention

3
in economic activity at central and local levels

Restricting and reducing publicly unjustified burdening

4
of economic activity
Clear defining of the types of regimes regulating
5
economic activity
Increasing transparency in the introduction of regulatory
6
regimes
Restricting the introduction of new regulatory regimes
(licensing and registration) by requiring a motivated
7
opinion on the necessity for such a regulation and
advance notification of affected persons
Eliminating normative requirements that may reduce
8
competition
Reducing sources of corruption by limiting the
9
discretionary power of administration
Securing publicity of the work of administrative bodies
in applying normative acts related to administrative
10
regulation and control on economic activity, as well as
the reasons for their changes
7.3. Operational objectives
Standardizing documents on different regimes of
11
administrative regulation and control
Computerizing or creating easy-to-use forms of existing
12
registers
13 Improving intra-institutional coordination
Improving inter-institutional coordination, including the
14
access to judicial registers and civil status registers
15 Implementing the principle of “one-stop shop”

Strengthening the subsequent control on businesses

16
through spot checks and documents

8. Rank the three objectives achieved to the greatest extent in early 2010 and comment on the
reasons for this success?
(use the numbers from question 7)
8.1. First place, objective No.

8.2. Second place, objective No.

8.3. Third place, objective No.

52
 Ex‐Post Impact Assessment of the ALARACEAA                                                                APENDIX 4 
9. Rank in reverse order the three objectives that were achieved in the least extent, or for
which the result is rather contrary to objectives set, by early 2010 and comment on the reasons
for this failure?
(use the numbers from question 7)
9.1. First place, objective No.
9.2. Second place, objective No.
9.3. Third place, objective No.

10. Rank on a scale from 1 to 5 the extent to which the listed drivers impede the efficient
implementation of LARACEAA.
1 - Very high
2 - High
3 - Low
4 – Very low
5 – Do not know
(Please answer on each line)
Drivers Estimation
1 Insufficient number of administrative officials to implement the Act
Low competence of the administration – lack of knowledge of legal
2 requirements
Poor organization of administrative structures, which does not guarantee the
3 timely examining of documents submitted by businesses

Unwillingness to eliminate the opportunities for administration to exercise

4 power over business

5 Desire of central governors to provide financial resources for the institutions

6 Desire of local governors to provide financial resources for municipalities

7 Desire of the administration to preserve opportunities for corruption

8 Business lacks knowledge of the opportunities provided by the Act

Weak capacity of business organizations to impose their views on central and
9 local levels

10 Lack of sufficiently powerful business lobbies

Willingness of branch organizations to legally ensure the inflow of funds

11 through the issuance of qualification certificates

12 Wish of licensed or registered businesses to restrict competition

13 Lack of administration that is specifically responsible to enforce the Act

Lack of expertise to implement certain requirements of the Act, such as the

obligation to prepare an Impact Assessment before the adoption of new
14 regulations
Other (please list in the following lines

15

16

53
APPENDICES 
11. Do you support the suggested proposals?

Proposal Yes, Yes, after No, the No, rather Do not

absolutely analysis and current the opposite know
assessment situation
should be
maintained
1 Reducing the number of licensing
regimes
2 Reducing the number of registration
regimes
3 Limiting the possibilities of local
authorities to introduce regimes by their
right to local rule-making
4 Expanding the practical application of
the principle of “silent consent”
5 Reducing the deadlines for response of
the administration
6 Decreasing the frequency of inspections
(based on the principle: fewer
inspections, higher fines for violations)
7 Imposing higher personal fines on
administrators who violate the Act
8 Simplifying the procedure for
submitting documents (number and
types of documents; e.g., part of the
required documents to be replaced by
declarations)

9 Increasing the legal opportunities for

self-regulation by business
10 Structuring and assigning an
administrative body to exercise
monitoring and control on
implementation of the Act.
11 Increasing the number and scope of
information campaigns for the public,
businesses and administrators with the
goal of raising their knowledge of the
Act and related normative acts

12 Introducing training programs on

LARACEAA implementation for central
and local administration
13 Increasing the of budget allocated for
consulting services on activities
stipulated by the Act (e.g., making IA
for any new normative act)

14 Other proposals (please describe)

54
Ex‐Post Impact Assessment of the ALARACEAA                                                                APENDIX 4 
12. Please make your comments on the proposals in the above question.

Proposal Comment
Reducing the number of licensing regimes
1
Reducing the number of registration regimes
2
Limiting the possibilities of local authorities to introduce regimes
by their right to local rule-making
3
Expanding the practical application of the principle of “silent
4 consent”
5 Reducing the deadlines for response of the administration
Decreasing the frequency of inspections (based on the principle:
fewer inspections, higher fines for violations)
6
Imposing higher personal fines on administrators who violate the
7 Act
Simplifying the procedure for submitting documents (number and
types of documents; e.g., part of the required documents to be
8 replaced by declarations)
9 Increasing the legal opportunities for self-regulation by business
Structuring and assigning an administrative body to exercise
monitoring and control on implementation of the Act.
10
Increasing the number and scope of information campaigns for the
public, businesses and administrators with the goal of raising their
knowledge of the Act and related normative acts
11
Introducing training programs on LARACEAA implementation
for central and local administration
12
Increasing the budget allocated for consulting services on
activities stipulated by the Act (e.g., making IA for any new
13 normative act)
Other proposals (please describe)
14

13. Are there specific texts in LARACEAA that you would like to comment and/or should be
changed?

13.1. No
13.2. Yes, namely ………………………………………………….……………………

14. Would you like to share something that would contribute to improving the wording or the
application of LARACEAA?
………………………………………………….………………….........................................
..................................................................................................................................................

55
  

Appendix 5: Analysis of Stakeholders’ Replies to Survey Questionnaire

Estimate of the achievement of LARACEAA objectives39

For the purpose of analysis, responses have been grouped into a two-dimension scale:
 Objectives achieved to a high extent;
 Objectives not achieved or achieved to a low extent.

Based on the analysis of responses to the question “How do you estimate the level of
achievement of LARACEAA objectives by the beginning of 2010”, the following conclusions
can be made:

Objectives achieved to a high extent

More than 70 percent of the respondents find that the objective “Clear defining of the types of
regimes regulating economic activity” has been achieved to a high extent40.
More than one-half of the respondents agreed that the following objectives of the Act have
been reached to a high extent:
 Facilitate and promote economic activity through limiting to publicly justified limits the
administrative regulation and administrative control exercised by state authorities and local
governance bodies;
 Protect free economic initiative;
 Clearly define the limits of administrative intervention in economic activity at central and
local level;
 Restrict the introduction of new regulatory regimes (licensing and registration) by
stipulating the requirement for developing evidence of the necessity for such a regulation
and prior notification of affected persons.
Not achieved objectives
More than 80 percent of respondents consider as not-achieved the following objectives of the
Act:
 Increase transparency in the introduction of regulatory regimes;
 Reduce sources of corruption by limiting the discretionary power of administration;
 Secure publicity of the work of administrative bodies in applying normative acts related to
administrative regulation and control on economic activity, as well as of the reasons for
their change;
 Improve intra-institutional coordination;
 Improve inter-institutional coordination, including the access to judicial registers and civil
status registers.
 More than 70 percent of respondents indicate the following objectives have not been
achieved:
 Eliminate normative requirements that may reduce competition;

39
The response rate is estimated at about 40 percent out of 40 Questionnaires that were sent to stakeholders (key
experts and interested parties) and processed before January 2010.
40
In this analysis the respondent is able to indicate more than one answer.
56
Ex‐Post Impact Assessment of the ALARACEAA                                                                         APENDIX 5 

 Standardize documents on different regimes of administrative regulation and control;

 Implement the principle of “one-stop shop”.

Ranking of objectives

According to the responses, the three objectives achieved to the highest extent include:
 Clear definition of the types of regimes regulating economic activity;
Clear definition the limits of administrative intervention in economic activity at central and
local level;
 Computerizing or creating of easy-to-use forms of existing registers.
The three least achieved objectives:
 Restriction and constant reduction of publicly unjustified burdening of economic
activity;
 Increase of transparency in the introduction of regulatory regimes;
 Securing of publicity of the work of administrative bodies in applying normative acts
related to administrative regulation and control on economic activity, as well as of the
reasons for their change.
Estimation of underlying drivers impeding the efficient LARACEAA implementation

For the purpose of analysis responses have been grouped into a two-dimension scale:
 Very high/High
 Low/Very low.

Underlying drivers impeding to a very high/high extent the efficient implementation of

LARACEAA are:

 Unwillingness to eliminate the opportunities for administration to exercise power over

business;
 Desire of local governors to provide financial resources for municipalities;
 Wish of licensed or registered businesses to restrict competition;
 Lack of administration that is specifically responsible for enforcing the Act.
 On the other pole are the reasons that respondents consider as least impeding the
implementation of the Act:
 Insufficient number of administrative officials to implement the Act;
 Lack of sufficiently powerful and organized business lobbies.

Support to suggested proposals

The analysis of responses on the measures suggested to increase the efficiency of the Act’s
implementation provided grounds for the following conclusions:

57
APPENDICES 
Respondents give unconditional support to the following proposals41:
 Introduction of training programs on LARACEAA implementation for the administration
at central and local level (90 percent of responses);
 Increasing the number and scope of information campaigns for the public, businesses and
administrators, with the goal of raising of their knowledge of the Act and related normative
acts (80 percent of responses);
 Simplification of the procedure for submitting documents (75 percent of responses).
Proposals which respondents support, but after analysis and assessment, include:
Reducing the frequency of inspections, based on the principle: fewer inspections, higher
fines for violations (75 percent);
Increasing the legal possibilities for self-regulation by business (75 percent);
Increasing the budget allocated for consulting services on activities stipulated by the Act,
for example, making impact assessments for any new normative act (75 percent).
Proposals which get support in principle, with responses distributed equally (50:50) between
“unconditional support” and “after analysis and assessment”, include:
 Reducing the number of regulatory regimes;
 Limiting the possibilities of local authorities to introduce regimes by their right to local
rule-making;
 Expanding the practical application of the principle of “silent consent”;
 Reducing the deadlines for response of the administration;
 Structuring and assigning an administrative body to exercise monitoring and control on
implementation of the Act.

41
In this analysis the respondent is able to indicate more than one answer.
58
  

Appendix 6: Review of Regulatory Regimes at the Local Level

The goal of the review is to examine, analyze and summarize the practice of applying few
examples of regulatory regimes at the local level. The municipalities of Razgrad, Troyan, and
Kyustendil are the object of the study. The permit regime for performance of taxi
transportation—common for all three municipalities—has been selected for the analysis. The
regime for categorization of hotels is selected for the Municipality of Kyustendil, trade
certificates regime is chosen for the Municipality of Razgrad, while the regime for obtaining a
construction permit is selected for the Municipality of Troyan.

Taxi Transportation Permit

The regime “Permit of Performance of Taxi Transportation” is a license according to the Law
on Automobile Transport. According to Art. 12a, para. 5 of this law, the Minister of Transport
issues an ordinance for taxi transportation of passengers (Ordinance № 34 from December 6,
1999). The Law’s function is to regulate the scope and quality of services relating to
automobile transport. The taxi transportation of passengers is of particular concern in the
towns, and the licensing regime aims, above all, to limit the number of carriers supplying the
service and introduce regulations in each municipality to exert control over unlawful taxis.
This concern has been pointed out as a reason for the existence of the regime by all
municipalities that were examined.

On the basis of the Act and Ordinance № 34 of the Ministry of Transport, the Municipal
Council (MC) determines the valid term of the permit, which cannot be shorter than 12 months
and is universal for all carriers; the council determines the number of taxis allowed to work
within the municipal territory, as well as the order and conditions for distribution of taxis
among the individual carriers. For example, the decision of MC-Razgrad is for a term of 1 year
and a maximum of 250 taxis.

The mayor’s functions relate to issuing an ordinance for implementation of this responsibility.
Once the permit is prepared by the administration, the mayor signs it. It is by his ordinance that
a permit for taxi transportation may be revoked.

The documents submission procedure takes place at the center for services provided to the
population (the front-office of the municipality). The clients fill out a form entitled
“Application” and enclose the required documents in compliance with Ordinance № 34.

From the center the documentation is submitted to a chief specialist (chief expert), responsible
for transportation (Troyan, Razgrad), who examines the enclosed documents and prepares the
permit. The permit is signed by the mayor of the municipality. The entire documentation is
then returned to the center where the applicant receives the permit.

This administrative procedure is different in the Kyustendil municipality. The difference is

evident at the stage of submission of the application for issuing of a permit for taxi
transportation: the secretary examines the completeness of the documentation and issues an
incoming number. After deciding on the application, another employee checks on the validity
of the documents as well as on their compliance with the conditions set forth in Ordinance №34
and prepares the permit. Once the mayor signs the permit, the employee informs the carrier
(usually via a telephone number provided for that purpose and occasionally by post) that he/she
may come to pick up the permit and sticker (the other two municipalities do not issue a sticker);
the official also informs the applicant if a document is missing (or if the documentation
submitted is incomplete or inaccurate). The permit and the sticker (and the original receipt for
the paid fee) are returned to the carrier by the secretary. In cases of omission in the

59
APPENDICES 
documentation submitted, the secretary is obliged to demand a correction, before preparing the
permit.

In all three municipalities, the servicing is provided at a single desk, i.e. the clients do not need
to carry the documents back and forth between departments, and they have no direct contact
with the employees responsible for issuing the permit.

The applicable procedures and documents can be found on the web-sites of the respective
municipalities. The three municipalities, however, have not implemented a practice allowing
for the electronic submission of documents and applications.

The following standard documents are required for issuing of a taxi permit:

 Standard application form;

 List of the vehicles for which the licensed company applies for permits;
 Legalized copy of the certificate of good working condition of the vehicles;
 Legalized copy of the certificate of suitability of the drivers to perform taxi
transportation activities;
 Legalized copy of the certificate of psychological soundness of the drivers;
 Certificate of the lack or abundance of liabilities to the state;
 Certificate of the lack or abundance of liabilities to the municipality;
 Receipt for the service fee paid.

Additionally, the Razgrad municipality requires a copy of the license (certificate of

registration), while the Kyustendil municipality requires the receipt of taxes paid on the
vehicles in the current year.

The time required to complete the permit process varies among the municipalities. In Razgrad
and Kyustendil the standard term is 14 days, although in Razgrad the carrier can make use of a
faster service, whereby the permit is issued in three days. In Troyan the term is 30 days and
according to local experts it can be shortened.

In 2009, the mayors of these municipalities have issued the following number of permits for
taxi transportation:

 164 permits in Razgrad;

 67 permits in Troyan;
 162 permits in Kyustendil;

This number is relative to the size of the respective towns.

The issuing of the permit is taxed via a “service fee” determined by a special ordinance of each
MC. In Razgrad, the price is only BGN 4 per vehicle (BGN 6 for the quick service). In
Troyan, which is a smaller city, the price is BGN 10, while in Kyustendil it is BGN 40, which
also includes the value of the hologram sticker.

The evaluation of the councilors, made on the basis of the value of the expenditures relating to
the provided service, indicates that the specified price exactly covers the costs in Razgrad; it
exceeds the expenditures in the case of Troyan; and amounts to about 70 percent of the related
expenditures in Kyustendil.

60
Ex‐Post Impact Assessment of the ALARACEAA                                                                                  APENDIX 6 
The analysis of the goals of a permit regime for taxi transportation gives grounds for the
following conclusions:

 First, the decisions for the number and location of taxi stopping places, the distribution
of the quotas between the different carriers, and the control over unlawful carriers are
made at the local level. This provides grounds for this activity to be regulated by the
municipalities;
 Second, in addition to achieving the goal of controlling the number of businesses
providing taxi service, municipalities attempt to achieve other unrelated goals, such as
requiring applicants to submit documents certifying that they do not have outstanding
liabilities to the local and state governments;
 Third, each business is obliged to prove to the municipality that it does not owe any
taxes, and the issuing of these documents is time—and resource—consuming. Instead,
the municipality could verify itself whether the carrier and its drivers have paid their
taxes. The same applies to the verification of liabilities to the state. Practically, the
public authority transfers the consequences of its own lack of organization to the clients
and its taxpayers;
 Fourth, some of the documents are duplicated and their provision is pointless, both from
the standpoint of the regulatory goals and of the municipal goals, which are unrelated to
the procedure itself. For example, copies (moreover, notary certified copies) of
documents certifying the good working conditions of the vehicles and the suitability of
the drivers are of no need to the municipality. They are issued by other competent
authorities that can exercise control over those matters. This duplicated requirement
also costs money and time to the businesses;
 Fifth, the local authority does not maintain a public register of the issued permits, nor
does it publish a list of all permits issued, the numbers of taxi vehicles, the determined
taxi stopping places and other such data that would be of use to the citizens and provide
an opportunity for them to exert control over the rule abidance.
Categorization of establishments for catering, entertainment, and hotels

The need for the implementation of this regulatory regime is established by the Act on Tourism
and the Ordinance on the Categorization of the Means of Shelter and Lodging and the
Establishments for Catering and Entertainment (the Ordinance). This is a registration regime
that has been specified in the Act. The Act synchronizes the Bulgarian and European
legislation and practices with respect to the assignment of a category to the different
establishments for shelter and lodging. To receive a given category designation, the
establishment (or means of shelter) has to meet certain requirements. The Act on Tourism
provides only the minimum requirements for each category. In this way the conditions for the
provision of hotel and restaurant services are intended to ensure that the category of, for
example, one star is the same in Bulgaria as it is in Italy, for instance.

Each municipality has the responsibility to assign catering and entertainment establishments
with 1 or 2 stars, and in the case of hotels 1 star or at some places of lodging (single rooms,
family hotels, holiday homes, bungalows, camping sites and others) with 1, 2 or 3 stars (the
catering establishments in them receive the same category).

To meet this requirement, the mayor appoints a Municipal Commission on Categorization,

which includes representatives of the municipal administration, of the lodging establishments
(or their organizations), and NGOs in the sphere of tourism.

61
APPENDICES 
The commission recommends the assignment of a particular category to the individual sites that
have requested assignment of a category if the respective minimum requirements set forth by
the Act on Tourism and the Ordinance have been met.

In the Kyustendil municipality, servicing is provided at a single counter. The document

submission procedure is as follows. The client fills out an application for categorization and
submits it along with the documents listed in the Ordinance. The employees verify the
completeness and authenticity of the submitted documents and sign a Protocol for
documentation completeness (as required by the Ordinance). Subsequently, the client officially
submits the Application Form and the enclosed documents to the secretary.

The documents required for registration are as follows:

 Certificate of current court registration;

 Certificate that the company is not in the process of liquidation;
 Reference of the professional and language qualification of the personnel at the site;
 Copies of the documents that certify the professional and language qualification of the
manager of the tourist site;
 A category determination form;
 Copy of the ownership document;
 Copy of the rent contract;
 A document certifying that the site has been brought into operation;
 A notary certified letter of attorney if the application is submitted by a representative;
 A document certifying the payment of the fee, in compliance with Art. 55, para. 4 of the
Act on Tourism.

The secretary then transfers the documents to a member of the Commission on categorization.
He/she prepares a draft ordinance to initiate a procedure for categorization of the site. It is
signed by the mayor, who also issues a temporary certificate valid for a term of two months.

Within the two-month period of the temporary certificate the Commission visits the site,
examines whether the minimal requirements set forth in the Act are met and determines its
category. It makes a recommendation to the mayor for the issuing of an ordinance for that
category. The mayor signs the ordinance, orders the category symbols and, once they are
received, hands them to the respective establishment.

The applicable procedures and documents are available on the web-site of the municipality but
cannot be submitted electronically. This is because, according to Art. 11 of the Ordinance,
some members of the expert commission (employees of the municipal administration) must
evaluate the submitted documents on their completeness and authenticity. The categorization
applications are not accepted unless all documents required under the Ordinance have been
enclosed. The acceptance of the documents must be accompanied by a payment of the fee.
These requirements hamper the possibility for electronic submission.

The deadline for issuing a decision is two months, as established by the Tourism Act. The term
is sufficient for the completion of the described activities. Shortening it would burden the
municipalities, which deal with a substantial number of establishments and hotels. In 2009, the
Kyustendil municipality categorized a total of 53 sites, of which 42 were establishments for
catering and entertainment and 11 were hotels.

62
Ex‐Post Impact Assessment of the ALARACEAA                                                                                  APENDIX 6 
The service fees are not determined by the MC. They are regulated by the Tourism Act under
‘Tax tariffs collected under the Act on Tourism’. The basis on which the fees have been
determined is unclear.

Part of the fee is used to cover the cost of producing the category symbols and of remunerating
the members of the commission who are not employees of the municipal administration. The
income from service fees covers around 40 percent of all expenditures (if the expenses of the
municipal administration are taken into consideration).

The analysis of the documents and procedures for the categorization of establishments and
hotels provides grounds for the following conclusions:

 First, this is a regime that aims to equalize the national evaluation criteria with those
applied across Europe. From this standpoint, it is reasonable for it to be regulated by
the legislature.
 Second, some of the documents, which the municipal administration requires from each
business, can be officially obtained by the municipality itself from the Registry Agency,
the court and others.
 Third, when the categorization expenses are incurred locally, it is not logical for
someone else (in this case, the state) to regulate their amount. It is believed that this fee
should be regulated by the Act on Local Fees and Taxes and its size should be
determined by MCs.
 Fourth, it would be useful to publish the evaluations made for the purposes of
categorization of the sites on the municipal web-site or on specialized web-pages as a
means to publicize local tourism opportunities.
Registration of a commercial establishment

The description and analysis of this regulatory regime is based on the examined practices
implemented in the Razgrad municipality.

This regime is unlawfully implemented under the name “Registration of a commercial

establishment” and is normatively settled by Ordinance №4 of the MC on the order and
conditions for carrying out trading activity within the Razgrad municipality. The following
legislative articles and paragraphs have been specified as grounds for its implementation: Art.
76, para. 3 of APC; Art. 21, para. 2 of the Law on Local Self-Governance and Local
Administration (LLSGLA) and Art. 8 of the Law on Statutory Instruments. Art. 21 of
LLSGLA determines the legal capacity of the MC, while para. 2 stipulates that: “Whilst
exercising its legal capacity in compliance with para. 1, the Municipal Council approves
statute-books, ordinances, instructions, decisions, declarations and addresses.” This ground is
in direct contradiction of Art. 4, para. 1 of LARACEAA.

The municipal ordinance envisages the requirement for registration within an informational
database of stationary commercial establishments engaged in trading activity within the
Razgrad municipality. Within the Ordinance, it is specified as a registration regime.

The trading certificate is issued both at the moment of establishment of a new commercial
establishment and in case of changed circumstances, for example, a change of tenant.
According to the Ordinance, the goal behind this regime is the creation and maintenance of an
informational database covering trading activity within the municipality, as well as a means to
exercise control, which has been declared a responsibility of the municipality by a number of
other laws. It also allows for the establishment of connections with representatives of this

63
APPENDICES 
business. The information database “Stationary commercial establishments” is developed and
maintained by the municipal administration and contains:

 Name and type of the trade site;

 Address of the trade site;
 Company headquarters, address of main office and telephone number of the tradesman;
 Name of the person, representing the tradesman;
 The site’s working hours;
 Number and date of issuing of the order for prolonged working time.

The control functions of the municipal administration under the Ordinance and the regulations
under other statutory instruments relating to trading activity concern: preservation of public
order (control over the adherence to working hours); compliance with the Law on Customer
Protection (control over prices and others); and the Spatial Law (has the commercial
establishment been brought into operation), and so forth.

The procedures relating to issuing of trade certificates and the required documents are
published on the web-page of the municipality. Templates of the application form can be
downloaded from there. However, the documents cannot be submitted electronically.

The clients are serviced at a single counter. The documents are submitted to the “front-office”
of the municipality. The approved trade certificates are received at the same place.

The tradesman has to submit the application form in accordance with the template. Copies of
the following documents must be included in the submission:

 A current business statement from the trade register;

 A document certifying the identification code by BULSTAT (Unified Identity Code
under the Unified Register for Identification of Economic and Other Subjects in the
Republic of Bulgaria, called “BULSTAT”);
 A document, certifying the property or rights of use of the site;
 A document, certifying that the site was brought into operation;
 A certificate of registration of the site in the Regional Inspectorate for Public Health
Protection and Control – Razgrad, whenever that is necessary;
 A notary certified letter of attorney if the application is submitted by a representative;
 A document certifying a lack of liabilities to the municipality as of the date of
application submission.

The internal procedure relating to the processing of the documents is as follows. The accepted
documents are passed from the front-office to the “Trade” unit, where they are examined and
processed; the prepared certificate is returned to the submission desk.

The term for issuing of the permit is 14 days from the moment of document submission. Once
the certificate is signed by the mayor or by an authorized representative, the commercial
establishment is included in the information database “Stationary commercial establishments”.
The mayor refuses to issue the certificate when some of the required documents have not been
submitted. The refusal can be appealed in compliance with the APC.

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The specified term is sufficient for the examination of the documents and preparation of the
certificate. In 2009, the Razgrad municipality issued 272 trade certificates. The service is free
of charge.

The analysis of the practice relating to the issuing of trade certificates gives grounds for the
assertion that this regime is unlawfully implemented and should be abolished.

Construction Permit

The regime is implemented on the grounds of the Spatial Law (SL). It is a permit regime. The
goal is the regulation of and control over construction.

The procedures and documents required for the issuing of a construction permit are posted on
the web-site of the municipality. However, applications and documents cannot be submitted
electronically. The servicing for this permit is provided at a single counter. The submission of
the documents is carried out in the customer service center of the administration; subsequently,
the customer also receives the permit from there.

The document processing procedure is as follows. The documentation is submitted to the

customer center, where the completeness of the submission is verified and the service fee is
charged. From the center, the documentation is passed on to the director of the “Territorial and
Urban Development” unit, who distributes it to internal experts for examination and approval.
Once all parts of the project are approved, the documents are returned to the director of the
“Territorial and Urban Development” unit, who prepares the construction permit and submits it
to the chief architect of the municipality for signature. The documentation, together with the
permit, is then returned to the customer center, from where the client can pick it up.

The term for provision of the service is seven days if the documentation is supplemented by a
Report for evaluation of the project’s compliance with existing construction requirements, and
30 days whenever the documentation does not feature such a report. According to a
representative of the Troyan municipality the term set by the SL is normal. Shortening it would
hamper the quality processing of the documentation. In 2009, the municipality issued 262
construction permits.

The clients pay a fee, which is regulated by the “Ordinance on determination and
administration of local taxes and fees within the Troyan municipality”. The size of the fees is
determined by the MC on the basis of the labor costs for the specialists engaged in providing
the service. The fee covers the incurred administrative expenses; its amount is determined by
the MC, based on the type of construction site and its size.

65
  

Appendix 7: Licensing Regimes and Existing Registers as per LARACEAA

Requirements

Regime/Activity Licensing Organ Legal Act Availability of a

Public Register
1. Banking activity, electronic BNB Banks – Law on credit 1. yes, for banks
money activities, payment institutions
institution activities, as well Law on payment services 2. no, for institutions
as system operator of and systems for electronic money,
payment systems activities. payment institution
activities, and activities
of a system operator of
payment systems
2. Insurance activity and FSC Insurance code yes
insurance broker activities
3. Regulated securities market FSC Law on markets of yes
activity, investment financial instruments
mediator, investment or Law on public offering of
management company as securities
well as a joint-stock Law on special investment
company with a special companies
investment goal
4. Additional voluntary and FSC Social security code yes
mandatory pension security
activites and actuarial
activity for servicing of
pension security companies
5. Voluntary social security FSC Social security code yes
activities for the
unemployed and/or
professional qualification
6. Health security activities FSC Health security code yes
7. Commodity exchange State commodity Law on commodity yes
activities exchange and exchanges and market-
market-places places
commission at CoM
8. Customs agent activities MF Law on excises and tax Not publically
Licensed warehouse owner warehouses accessible.
- license for management “Customs” agency The “Customs”
of a tax warehouse agency maintains a
register of the
licensed
wareshouse owners
and of the tax
warehouses – it is
not publically
accessible
9. Duty-free trade MF Law on duty-free trade Not publically
accessible
10. Gambling activities State gambling Law on gambling Not accessible
commission at MF
11. Production, transportation, MEET “Inter- Law on export control Public register
trade and external trading institutional Council” over weaponry and (maintain-ned by the
activities relating to at CoM “Inter- supplies and technologies Inter-institutional
weaponry, explosive and institutional with dual-use Council)
military supplies as well as commission” at
certain supplies and MEET
technologies with dual-use

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Ex‐Post Impact Assessment of the ALARACEAA                                                                                   APENDIX 7 
Regime/Activity Licensing Organ Legal Act Availability of a
Public Register
12. Private security activities MI - General Law on private security MI - Uniform
Directorate “Security activities automated centralized
police” register – not
publically accessible
(the law itself prohibits
it)
13. Activities relating to MI – General Law on MI Uniform register – not
drafting, manufacturing, Directorate “Fire public
import, trade, repair, safety and rescue”
installation and maintenance
of fire precaution equipment,
carrying out of activities
relating to emergency and
fire safety, carrying out of
ignitable and explosive
activities
14. Manufacturing of compact MEET Law on the administrative yes
disks (optical disks) and/or regulation of
matrixes for them manufacturing and trade
of optical disks, matrixes
and other carriers,
containing information
that is subject to
copyrights and similar
rights
15. Medical institution activities MH Law on medical yes
relating to hospital care, establishments
clinics and homes for
medical-social care
16. Production, processing, MEET Law on the control over no
transportation, trade, import, narcotic substances and
export, transit and storage of precursors
narcotic substances for
medical and veterinary
purposes and precursors
17. Industrial processing of CoM via MF Law on tobacco and yes
tobacco and production of tobacco products
tobacco products
18. Conducting technical State Agency for Law on products technical
surveillance of hazardous Metrological and requirements
installations, examination of Technological
measurement equipment Surveillance
(SAMTITCS)

19. Production of alcohol, MEET Law on wine and yes

distillates and alcoholic alcoholic beverages
beverages

20. Production and preparation MAF – Executive Law on sowing and no

of sowing and planting agency for sort planting material
material for agricultural evaluation,
plants, variety examination approbation and grain
activites for agricultural control
plants, used for sowing and
planting material,
distribution and trade with
seeds and planting material
that deviates from the
minimal quality
requirements

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APPENDICES 
Regime/Activity Licensing Organ Legal Act Availability of a
Public Register
21. Public warehouses for grain MAF – National Law on grain storage and yes
and grain depository agency for grain and trade
activities forage
22. Obtaining, processing and MAF – Executive Law on stock-breeding yes
storage of sperm and ova, Agency for selection
transplantation of embryos and reproduction in
in artificial insemination the stock-breeding
centers and centers for sphere
embryo transfers as well as
breeding association
activities relating to
selection and production
within the veterinary
medicine system
23. Manufacturing and usage of MAF – National Law on veterinary activity yes
veterinary medical products, veterinary service
retail and wholesale trade of
veterinary medicinal
products and transportation
of animals
24. Commercial Fishery MAF – Executive Law on fishery and
agency for fishery aquatic cultures
and aquatic cultures
25. Commercial activities with MEET Law on waste yes
wastes from ferrous and management
non-ferrous metals
26. Activities in the energy SCEWR Law on Energy yes
sphere
27. Activities, related to NRA Law on safe utilization of yes
utilization of nuclear nuclear energy
installations, nuclear
material and other source of
ionizing radiance

28. Exercising of supervision at MRDPW – Spatial Law yes

construction sites Directorate for
National
Construction
Supervision
29. Railway transportation of MTITC – Executive Law on railway transport yes
passengers and/or freight Agency Railway
and inspection of the Administration
technical condition of the
carriages and the legal
capacity and qualification of
the personnel

30. Public transportation of MTITC – Executive Law on road transport no

passengers and freight via Agency Automobile
automobile transportation, Administration
including international
transportation
31. Conducting inspection of the MTITC Law on road transport no
technical condition of the
means of road
transportation; repair and
technical servicing of those
means
32. Universal postal service or CRC Law on postal services yes
of services which fall within
the scope of the universal
postal service

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Ex‐Post Impact Assessment of the ALARACEAA                                                                                   APENDIX 7 
Regime/Activity Licensing Organ Legal Act Availability of a
Public Register
33. Postal money transfers CRC Law on postal services yes
34. Airport operator activities; MTITC – General Law on aviation no
ground services operator or Directorate
airline carrier “Aviation
Administration”
35. Technical servicing and MTITC – General Law on aviation no
repair of aviation technology Directorate “Aviation
Administration”
36. Manufacturing, import CRC Law on communications
and/or distribution of radio
transmission devices for
civil purposes
37. Radio and television CEM Law on radio and yes
activities television
38. Conducting freight MTITC – Executive Trading navigation code no
transportation along internal Agency Maritine
water-ways Administration
39. Provision of social services MLSP – Agency for Law on social assistance yes
to children social assistance Law on child protection
40. Conducting and certifying of NAVET at CoM Law on vocational yes
vocational training education and training
41. Informing and conducting of NAVET at CoM Law on vocational yes
vocational orientation education and training
Source: Authors’ research, as of January 2010. 

69
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