OECD Product Market Regulation (PMR) Indicators: How does Bulgaria compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Bulgaria
1.93
OECD countries Average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Bulgaria OECD average 5 Most competition-friendly countries 5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Product market regulation in Bulgaria is less competition friendly than in most OECD countries. Public ownership of large operators in network sectors is extensive, and the administrative requirements for setting up new businesses and the licensing regime could be simplified to facilitate entry. On the contrary, the legislative system is transparent and there are rules in place to ensure that new regulations do not generate unnecessary distortions to competition. Bulgaria has also very low barriers to foreign direct investments.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Bulgaria
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Bulgaria
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Overall, the regulatory framework in the energy and transport sectors is in line with the OECD average, but there is scope for improvement in natural gas and transport by water. Regulations in the e-communications and in the retail trade of medicines are close to the most competition friendly ones in the OECD. On the contrary, lawyers, notaries, civil engineers and architects are subject to more restrictive rules than most OECD countries.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Bulgaria 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Bulgaria 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Bulgaria
Strengths
Challenges
Laws and regulation are easy to access and to understand and a regulatory agenda is regularly published. In addition, there are explicit programs in place to reduce the compliance costs for enterprises.
The retail sale of medicines is less regulated than in many OECD countries, in particular, there are no restrictions on the number, location and ownership of pharmacies and non-prescription medicines can be sold in drugstores, pharmacies and online.
Bulgaria has a very competition-friendly regulatory set-up in the e-communications sector when compared with most OECD countries. Public ownership is limited, and regulation is close to the international best practice.
The administrative requirements necessary to start new firms, whether limited liability companies or personally owned enterprises, are quite burdensome: a large number of procedures have to be fulfilled before a business can be started.
Bulgaria could reduce administrative barriers to entry in markets by having an online one-stop shop that issues all licences and permits, and that accepts all notifications necessary to open up a business, as well as a "silent is consent" rule to speed up the approval process.
There is room for reducing barriers to entry and constraints on conduct in the market for most professional services. Notaries and lawyers, in particular, face extremely rigid constrains on their conduct, as they are prohibited from advertising their services, they cannot cooperate with any other profession and they face rigid constraints on the legal form that professional firms can take.
Further information
““What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), "The 2018 edition of the OECD PMR indicators and database – methodological improvements and policy insights ", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org