Clarification of the Ministry of Trade and Industry regarding the number of registered and terminated businesses in Kosovo

Considering articles recently published in some print and electronic media reflecting incorrectly and in very superficial manner the trend of registered and terminated businesses in Kosovo, MTI, respectively, the Kosovo Business Registration Agency (KBRA), wants to inform the public with the latest data regarding registration and termination of businesses in our country.

The reason for this clarification is to prove with facts and references the opposite of what has been reflected in those articles, which emphasize either on purpose or unintentionally the number of terminated businesses, a number which in fact is significantly smaller than the number of companies registered in KBRA. 

Based on statistical analyses made by KBRA, it can be clearly seen that the business termination trend in the last year is completely within positive parameters and a fairly optimal growth. During this period, due to the improvement of business environment, there was an increase in the number of registered businesses which is proportional to the number terminated businesses. The number of terminated businesses is a natural phenomenon in all economies, given that entrepreneurs conduct various market activities by undertaking business risks and trying to improve their individual financial situation. Statistical data argue that the rate of terminated businesses in the region and in many other countries either in transition or developed countries is higher than in Kosovo, which proves that the attempt of some media which put emphasis only on the number of terminated businesses without comparing it with the number of registered businesses is a tendency to manipulate and misinform the public opinion.

According to data from KBRA and according to comparative analyses over the years, it can be clearly seen a continuous increase in the registration of businesses, reaching a record number of registered businesses with 10,549 in 2016, while the number of voluntary terminated businesses is convincingly smaller (in total, we had 2,379 terminated businesses in 2016), which is about 22% compared to registered businesses. For more detailed information on the number of registered and terminated businesses, see the following tables (Fig. 1 and Fig. 2)

Figure 1. Registered businesses according to data from KBRA

Based on the data presented above, we can conclude that Kosovo has a normal trend of creating and developing new businesses but also regarding the number of terminated businesses, because every registered business cannot necessarily be profitable in not a single free market economy, on the contrary, the Kosovo trend of registration/termination of businesses is estimated to be very positive and hopeful for overall economic development thanks to reforms undertaken by the Government for the continuous improvement of the environment for doing business in Kosovo.  

Figure 2. Terminated businesses according to data from KBRA.

If this business termination trend is compared to countries in the region and beyond, it turns out to be very positive for Kosovo and the current environment of doing business, given that in European countries with advanced business infrastructure, the ratio of terminated businesses against registered businesses is over 30%. Whereas in 2015, in several different countries (as in the USA, Slovenia, Croatia) occurred another regressive phenomenon, where the number of terminated businesses was higher than the number of registered companies.          

To make a comparison with global and regional trends of ratios between terminated businesses against registered businesses, we present the official data for some countries from the last official report “The International Business Registers Report 2016” for 2015, prepared by European Commerce Registry Forum (ECRF), a report which provides the following data:

Based on the data presented above, we can conclude that Kosovo has a normal trend of creating and developing new businesses as well as in terms of the number of terminated businesses, because every registered business cannot necessarily be profitable in not a single free market economy, on the contrary, the Kosovo trend of registration/termination of businesses is estimated to be very positive and hopeful for overall economic development thanks to reforms undertaken by the Government for the continuous improvement of the environment for doing business in Kosovo.