doing business 2019

311 Pages·2017·16.88 MB·English

DOI N G
BUSI NESS 201 9
Training for Reform
TRADING
ACROSS
BORDERS
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DOI N G
BUSI NESS 201 9
Training for Reform
TRADING
ACROSS
BORDERS
COMPARING BUSINESS REGULATION FOR DOMESTIC FIRMS IN 190 ECONOMIES
A World Bank Group Flagship Report
DOING BUSINESS 2019
Resources on the
Doing Business website
Current features Historical data
News on the Doing Business project Customized data sets since DB2004
http://www.doingbusiness.org http://www.doingbusiness.org/custom-query
Rankings Law library
How economies rank—from 1 to 190 Online collection of business laws and
http://www.doingbusiness.org/rankings regulations relating to business
http://www.doingbusiness.org/law-library
Data
All the data for 190 economies—topic Contributors
rankings, indicator values, lists of More than 13,800 specialists in 190
regulatory procedures and details economies who participate in
underlying indicators Doing Business
http://www.doingbusiness.org/data http://www.doingbusiness.org/contributors
/doing-business
Reports
Access to Doing Business reports as well Entrepreneurship data
as subnational and regional reports, case Data on new business density (number
studies and customized economy and of newly registered companies per 1,000
regional profiles working-age people) for 143 economies
http://www.doingbusiness.org/reports http://www.doingbusiness.org/data
/exploretopics/entrepreneurship
Methodology
The methodologies and research papers Ease of doing business score
underlying Doing Business Data benchmarking 190 economies
http://www.doingbusiness.org/methodology to the best regulatory practice and an
ease of doing business score calculator
Research http://www.doingbusiness.org/data
Abstracts of papers on Doing Business /ease-of-doingbusiness-score
topics and related policy issues
http://www.doingbusiness.org/research Information on good practices
Showing where the many good
Doing Business reforms practices identified by Doing Business
Short summaries of DB2019 business have been adopted
regulation reforms and lists of reforms http://www.doingbusiness.org/data
since DB2006 /good-practice
http://www.doingbusiness.org/reforms
DOING BUSINESS 2019
Contents
iv Foreword ƒ Doing Business 2019 is the 16th in a
series of annual reports investigating
1 Overview
the regulations that enhance business
22 About Doing Business activity and those that constrain it.
Doing Business presents quantitative
indicators on business regulation
Case studies and the protection of property rights
that can be compared across 190
33 Starting a Business and Registering Property: economies—from Afghanistan to
The role of training in facilitating entrepreneurship and property rights Zimbabwe—and over time.
39 Getting Electricity: ƒ Regulations affecting 11 areas of the
life of a business are covered: starting
Understanding the benefits of wiring regulation
a business, dealing with construction
46 Trading Across Borders: permits, getting electricity, registering
Training for trade facilitation property, getting credit, protecting
minority investors, paying taxes, trading
53 Enforcing Contracts and Resolving Insolvency: across borders, enforcing contracts,
Training and efficiency in the judicial system resolving insolvency and labor market
regulation. The labor market regulation
data are not included in this year’s
61 Annex: Labor Market Regulation:
ranking on the ease of doing business.
Trends from Doing Business data
ƒ Data in Doing Business 2019 are current
67 References as of May 1, 2018. The indicators are
used to analyze economic outcomes
73 Data Notes
and identify what reforms of business
regulation have worked, where and why.
126 Ease of Doing Business Score and Ease of Doing Business Ranking
133 Summaries of Doing Business Reforms in 2017/18
152 Country Tables
216 Acknowledgments
DOING BUSINESS 2019
Foreword

What gets measured gets done. 23% of income per capita, compared to
47 days and 76% of income per capita
Over the past 15 years, no report has in 2006. Even more telling, today the
illustrated this aphorism better than Doing average paid-in minimum capital that
Business. Anchored in rigorous research entrepreneurs must deposit is 6% of
and methodology, Doing Business gathers income per capita, compared with 145%
detailed and objective data on 11 areas of income per capita in 2006. The global
of business regulation, helping govern- average time to prepare, file and pay
ments diagnose issues in administrative taxes has fallen from 324 hours in 2005
procedures and correct them. The report to 237 hours in 2017.
measures complex regulatory pro-
cesses by zeroing in on their quantifiable Sub-Saharan Africa has been the region
components, which can be contested, with the highest number of reforms each
compared—over time and across econo- year since 2012. This year, Doing Business
mies—and, ultimately, reformed. captured a record 107 reforms across 40
economies in Sub-Saharan Africa, and
Doing Business has inspired thousands of the region’s private sector is feeling the
articles published in peer-reviewed jour- impact of these improvements. The aver-
nals and created a platform for informed age time and cost to register a business,
debate about regulatory and institutional for example, has declined from 59 days
frameworks for economic development. and 192% of income per capita in 2006
Many Doing Business indicators have to 23 days and 40% of income per capita
been incorporated into the indexes of today. Furthermore, the average paid-in
other institutions, which has spurred minimum capital has fallen from 212% of
more debate about the ideal business income per capita to 11% of income per
climate to drive inclusive, sustainable capita in the same period.
economic growth.
This year’s 10 top improvers include a
Since its launch in 2003, Doing Business range of economies—large and small;
has inspired more than 3,500 reforms rich and poor—from five regions. The
in the 10 areas of business regulation diversity shows that, regardless of
measured by the report. This year, background, any economy can improve
we observed a peak in reform activity business regulation when the will of
worldwide—128 economies undertook a policy makers is strong. With 13 reforms
record 314 reforms in 2017/18. Around between them, China and India—two
the world, registering a business now of the world’s largest economies—are
takes an average of 20 days and costs among the 10 top improvers. At the same
FOREWORD v
time Djibouti, a small economy, is also not necessarily follow. A ranking helps entrepreneurship and a thriving private
on the list with six reforms. And with a put the information in front of leaders sector. Without them, we have no chance
total of 12 business regulatory reforms and makes it hard to ignore. The report to end extreme poverty and boost shared
between them, Afghanistan and Turkey helped inspire the Human Capital Index prosperity around the world.
are on the list of 10 top improvers for the (HCI), which we launched at the 2018
first time in the report’s history. Annual Meetings in Indonesia. Like Doing International institutions and research
Business, the HCI is based on the idea that, centers can play a central role by build-
Perhaps most notably, four of the 10 regardless of how complex an area may ing a solid base of knowledge and data
top improvers—Afghanistan, Djibouti, be, with solid research and methodology to inform governments, researchers and
Côte d’Ivoire and Togo—are countries it can be measured. These types of data the general public. With Doing Business,
suffering from fragility, conflict and vio- promote reform, not only because they the World Bank Group is fully commit-
lence. The World Bank Group and other are easy to analyze, trace and act on, but ted to this mission. The reforms that the
organizations have worked closely with also because they increase transparency report inspires will help people reach
these economies to address pressing and accountability. their aspirations; drive inclusive, sustain-
humanitarian and developmental needs, able economic growth; and bring us one
while also strengthening their legal and Governments have the enormous step closer to ending poverty on the face
economic institutions. task of fostering an enabling environ- of the earth.
ment for entrepreneurs and small and
Doing Business taught us that even with medium-size enterprises. Sound and
comprehensive evidence, reforms do efficient business regulation is critical for
Jim Yong Kim
President
World Bank Group
DOING BUSINESS 2019
Overview
ƒ Doing Business captured a record 314
regulatory reforms between June 2,
An economy cannot thrive without a healthy private sector. When local 2017, and May 1, 2018. Worldwide,
businesses flourish, they create jobs and generate income that can be 128 economies introduced substantial
regulatory improvements making it easier
spent and invested domestically. Any rational government that cares
to do business in all areas measured by
about the economic well-being and advancement of its constituency pays
Doing Business.
special attention to laws and regulations affecting local small and medium-
size enterprises (SMEs). Effective business regulation affords micro ƒ The economies with the most notable
and small firms the opportunity to grow, innovate and, when applicable, improvement in Doing Business 2019 are
move from the informal to the formal sector of an economy. Like its 15 Afghanistan, Djibouti, China, Azerbaijan,
predecessors, Doing Business 2019 continues to enable regulators to assess India, Togo, Kenya, Côte d’Ivoire, Turkey
and benchmark their domestic business regulatory environments. and Rwanda.
ƒ One-third of all business regulatory reforms
recorded by Doing Business 2019 were in the
Doing Business advocates for both regula- minority investors, paying taxes, economies of Sub-Saharan Africa. With a
tory quality and efficiency. It is important engaging in international trade, enforcing total of 107 reforms, Sub-Saharan Africa
to have effective rules in place that are contracts and resolving insolvency. once again has a record number this year.
easy to follow and understand. To realize Doing Business collects and publishes
ƒ The BRIC economies—Brazil, the Russian
economic gains, reduce corruption and data on labor market regulation with a
Federation, India and China—introduced a
encourage SMEs to flourish, unnecessary focus on the flexibility of employment
total of 21 reforms, with getting electricity
red tape should be eliminated. However, regulation as well as several aspects
and trading across borders the most
specific safeguards must be put in of job quality. However, this regulatory common areas of improvement.
place to ensure high-quality business area does not constitute part of the ease
regulatory processes; efficiency alone of doing business ranking (figure 1.1). ƒ The 10 top economies in the ease of doing
is not enough for regulation to func- For more details on the Doing Business business ranking share common features of
regulatory efficiency and quality, including
tion well. What use is it when one can indicators, see the data notes at http://
mandatory inspections during construction,
transfer property in just a few days and www.doingbusiness.org.
automated tools used by distribution
at a low cost, but the property registry
utilities to restore service during power
contains unreliable information with Each of the measured business regula-
outages, strong safeguards available to
incomplete geographic coverage? Doing tory areas is important to nascent and creditors in insolvency proceedings and
Business exposes cases with evident existing entrepreneurs. However, as automated specialized commercial courts.
discrepancies between regulatory quality Doing Business data show, SME owners
ƒ Training opportunities for service providers
and efficiency, signaling to regulators face drastically different realities across
and users are positively associated with
what needs to be reformed. economies as they set up and operate
the ease of doing business score. Similarly,
their businesses. An entrepreneur in
increased public-private communication on
Doing Business 2019 measures the Uganda, for example, will spend nearly
legislative changes and processes affecting
processes for business incorporation, a month and undertake 13 procedures SMEs are associated with more reforms
getting a building permit, obtaining an to set up a new company. The entre- and better performance on the Doing
electricity connection, transferring prop- preneur will then be required to manage Business indicators.
erty, getting access to credit, protecting another 18 interactions with different
2 DOING BUSINESS 2019
FIGURE 1.1 What is measured in Doing Business?
Starting a Getting a
business location
Labor market
regulation Dealing with
Starting a construction
business permits
Getting
Resolving electricity
insolvency
Registering
property
Enforcing
Operating in a contracts Getting
secure business Protecting credit Accessing
Paying
environment taxes minority finance
Trading across investors
borders
Dealing with
day-to-day
operations
Source: Doing Business database.
Note: Labor market regulation is not included in the ease of doing business ranking.
agencies and wait an additional four Doing Business does not claim to cover small and medium-size companies and
months to obtain a building permit. all the areas pertinent to private sector national competitiveness. Evidence from
Once the construction of the warehouse development and growth. The report has economic literature corroborates the
is completed, the entrepreneur will need a set of clear limitations; Doing Business economic relevance and importance of
to wait another two months and cash data alone are not sufficient to assess the areas measured by Doing Business. In
out 7,513.6% of income per capita to the overall competitiveness or foreign the case of the starting a business indi-
obtain a connection to the electrical investment prospects of an economy. cator set alone, more than 300 research
grid. In contrast, a Danish entrepreneur Doing Business does not assess market articles have been published in the
can expect to be able to register a new size, the soundness and depth of finan- top 100 academic journals since 2003
business in just 3.5 days, complete all cial markets, macroeconomic conditions, assessing how the regulatory environ-
required legal procedures to build a ware- foreign investment, security or political ment for entry affects a wide range of
house through seven steps in slightly stability. However, the Doing Business indi- economic outcomes such as productivity,
over two months and secure a reliable cators do offer insights for policy makers growth, employment and informality.
electricity connection for about 100% to identify areas for reform and improve Recent research shows the positive
of local income per capita. Differences the local business environment. For effects of improved business regulation.
in regulatory and institutional quality more information on what is measured Fewer procedures and lower levels of
can affect how many new businesses and what is not, see the chapter About minimum capital, for example, are posi-
are created and the dynamism of the Doing Business. tively and significantly associated with
private sector, which generates jobs and the process of starting a business. Where
economic opportunities. In Denmark procedures are more complex or unclear,
the average number of newly registered WHAT ARE THE BENEFITS the likelihood of corruption is higher.3
companies is eight per 1,000 workers OF IMPROVED BUSINESS Another study discusses the benefits to
per year, whereas in Uganda this figure REGULATION? companies of formal registration, such
is less than one new company per 1,000 as greater access to new equipment
workers per year.1 Many factors explain Doing Business includes 11 indicator sets and a larger scale of operations, which
this difference, including the level of that measure aspects of business regu- can lead to increased competitiveness
business regulation.2 lation which are important to domestic and productivity.4
OVERVIEW 3
In the context of construction permit- reaping the growth benefits of reform.9 methodology, including firm entry and
ting, simplicity and transparency are Ample literature on the importance of labor market regulation, trade regula-
key in allowing businesses to expand property rights finds a strong association tions and cost and tax regulations. Doing
and build new and safe infrastruc- between investment, access to finance, Business 2016 also presented an extended
ture. Research shows that regulatory productivity and economic growth.10 review of the literature published in 70 top
burdens often pose substantial obstacles academic law journals focusing on four
for investors. Discrepancies among Another area measured by Doing sets of indicators: enforcing contracts,
existing laws, for example, can lead to Business is the protection of minority getting credit (legal rights), protecting
unnecessary and even contradictory investors. Greater protection helps minority investors and resolving insol-
compliance requirements.5 Furthermore, foster trust and confidence and, in turn, vency.17 For further research insights,
lengthy processing times for required spurs greater access to finance for entre- updated annually, see the chapter About
approvals—as is the case in Ghana—can preneurs.11 The indicator set focuses Doing Business and the Doing Business
drive up costs and spur the development on how policy makers mitigate the risk website at http://www.doingbusiness
of an informal construction sector, where that corporate executives, directors and .org/research.
falsified construction permits result in majority shareholders will use their posi-
unsafe infrastructure.6 tion to advance their own interests at
the expense of the company and other WHERE IS BUSINESS
Electricity is a necessity for any business shareholders. Clear rules, robust rights REGULATION BETTER?
to function properly and expand. It is also and increased transparency are some
an important element in the competitive- of the regulatory instruments at their Doing Business benchmarks aspects
ness and strengthening of human capital disposal. Corporate governance is a key of business regulation and practice
in an economy. Research data indicate determinant of investment efficiency,12 using specific case studies with stan-
that higher electricity costs tend to while shareholders’ ability to sue and dardized assumptions. Based on an
have an adverse impact on businesses. hold directors accountable are essential economy’s performance in each of
As prices rise, firms shift their focus checks and balances.13 the 11 measured areas, the report
to less electricity-intensive production scores the efficiency and quality of the
processes, resulting in reduced output Finally, the regulation of labor markets business environment. This approach
and productivity.7 Equally important is is critical as policy makers work to facilitates the comparison of regula-
the reliability of a power connection. create more and better jobs for their tion and practice across economies
Recent research finds that power outages citizens. Labor regulation is also an area and allows for changes to be tracked
and deficient power infrastructure in of interest to researchers as they strive over time. The ease of doing business
Sub-Saharan Africa had a measurable to assess the optimal balance between score (box 1.1) serves as the basis for
negative impact on economic growth adequate worker protections and labor ranking economies on their business
over the period 1995−2007.8 market efficiency. In India, for example, environment: to obtain the ranking,
research shows that when faced with economies are sorted by their scores.
Similarly, clearly defined regulation restrictive labor laws, firms choose to The ease of doing business score shows
and equal access to property rights are circumvent such legislation by hiring an economy’s absolute position to the
essential for enabling businesses to workers indirectly through contrac- best regulatory practice, while the ease
expand their operations. If governments tors, especially in times of economic of doing business ranking is an indica-
do not put in place adequate land owner- uncertainty.14 Another study on foreign tion of an economy’s position relative
ship protections and leave investors open investment and the organization of to that of other economies.
to land disputes or property seizures, global firms suggests that firms consider
stakeholders would be disinclined to put the strength of worker bargaining power The economies that rank highest in
money into land and property develop- when making sourcing decisions.15 the ease of doing business (table 1.1)
ment projects. A recent study exploring are those that have consistently well-
whether political institutions have an Doing Business 2014 presented a designed business regulation or whose
impact on the effectiveness of economic synthesis of the fast-growing literature regulatory environments have thrived
reforms in promoting growth finds that published in top-ranking economic jour- thanks to comprehensive reform over
financial and trade reforms are more nals using Doing Business data for analysis the years. The top three economies
effective in developing economies with or motivation.16 The chapter reviews the this year—New Zealand, Singapore
sound property rights. This evidence different estimation methods used in and Denmark—exemplify a business-
suggests that sufficiently developed economic analysis and summarizes the friendly environment. Meanwhile,
property rights may be a precondition for recent research by area of study and Mauritius, which joins the group of