The Czech Republic has some of the most difficult conditions in the world for starting a business, according to a recent survey of 115 countries by The World Bank. The country ranked 77th. Tomáš Chrobák, director of Office House, which sells pre-registered and licensed ready-made companies, talks to The Prague Post about why the country's ranking is so low. He also suggests a few changes that would improve the lives of businesspeople here.

1. The World Bank recently reported that the Czech Republic ranks 77th out of 115 countries in terms of quality of conditions on the market for establishing a business. Do you find this ranking troubling? Where do you think this country should be ranked?

There's no question that the Czech Republic should rank much higher in the future. This country should follow the example of Slovakia when reforming its business registry process. A few years ago, Slovakia's system for registering businesses was almost identical to ours. But reforming its system enabled Slovakia to jump ahead of the Czech Republic in The World Bank's rankings.

2. What are the biggest obstacles to establishing a business here? How should they be fixed?

Last year's 'reform' of the business registry process introduced standard forms and a 10-day maximum waiting period for keeping an applicant in the registration process. However, a businessman still has to submit a long list of various documents that have him running from one office to another. And if the submitted documents aren't flawless, the application will be turned down. As a result, registering a business here is, for an inexperienced person, an exceptionally complicated process. Establishing a central office where applicants could submit one form, which the government has been planning for a long time, would improve the situation to some extent.

3. In terms of reducing bureaucracy, are businesspeople likely to see any beneficial policy come out of the upcoming elections?

Well, considering the results of the business registry reform, which the government worked on for more than a year and half, we can't expect any major development during the pre-election period. I assume parties will make promises during the election about reducing bureaucracy. The question is whether the winning party will remember them later.

4. Are you concerned that simplifying the procedures for registering a company would mean less business for you?

The countries with the highest number of businesses offering ready-made companies are the United Kingdom and the United States — the places where it's easiest to set up a business.

In this country, the introduction of the 10-day deadline in July created more demand for our services. That's because only the companies that submitted flawless paperwork were accepted, and the number of rejected applications soared. This is one reason the last few months of 2005 were the most successful in our company's history.

5. A record high number of foreigners registered as entrepreneurs here last year, according to the Czech Statistical Office. Was your business affected by the increase in foreign businesses?

Yes, we've seen an increase in interest from foreign entrepreneurs. Many ultimately decided that purchasing a ready-made company is a better and safer way of doing business here.

6. A growing number of companies want to have a 'prime' address. How important is an address to foreign companies looking to do business in the Czech Republic?

In general, it's usually the Czech clients who tend to prefer specific locations in Prague because they can differentiate between Prague districts. Foreigners mainly request good postal services, phone lines, et cetera.

Still, we do recognize that foreigners would like to have a 'prime' address, which can give their business a better image. [But] that concern applies to all businesses.

7. What legal conditions does a foreigner have to meet to open a ready-made company here?

To receive a business license and become listed in the Business Register, a foreigner must submit a signed agreement with the owner of the property where his business is located and a rental contract. Czech law also states that a company's office is identified with a proper name and an identification number so it can receive mail and be accessed by the public. If a company fails to meet those conditions, it is subject to a fine from the business licensing office.

8. Rent is increasing in certain parts of Prague because of high demand. Do you think rent will continue rising in the most popular locations or that companies will begin moving to less expensive areas?

There appears to be a trend toward companies moving out of city centers. In Prague, companies are heading to suburban areas that have good connections to the center. Also, many foreign companies have established their Czech office outside Prague, in Brno for instance.

9. The number of small and midsize businesses operating in this country fell last year. Is there a danger the Czech economy could become too dependent on large international firms?

Should this trend continue, there would perhaps be reason to worry. The problem isn't that there are too many foreign businesses here, but that the economy is being driven by particular industrial sectors that might not have long-term growth potential.

10. Is it fair that the Czech government offers significant investment incentives to foreign companies and not to Czech firms?

If the overall effect of a foreign investment is positive, then investment incentives are justifiable. In general, Czech companies would benefit more from a lower tax burden and less cumbersome bureaucracy.